Owning a Home Helps Protect Against Inflation

<article class="post-698752 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-698752"><span class="entry-date">May 24, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Owning a Home Helps Protect Against Inflation</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Owning+a+Home+Helps+Protect+Against+Inflation&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fowning-a-home-helps-protect-against-inflation%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Owning a Home Helps Protect Against Inflation Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20230524-owning-a-home-protects-against-inflation.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>You’re probably feeling the impact of high inflation every day as prices have gone up on groceries, gas, and more. If you’re a renter, you’re likely experiencing it a lot as your rent continues to <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" rel="noopener noreferrer" style="color: blue;" target="_blank">rise</a>. Between all of those elevated costs and uncertainty about a potential <a href="https://www.simplifyingthemarket.com/2023/05/02/a-recession-doesnt-equal-a-housing-crisis-2/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">recession</a>, you may be wondering if it still makes sense to buy a home today. The short answer is – it does. Here’s why. </p>
<p><strong>Homeownership actually shields you from the rising costs inflation brings.</strong></p>
<p><em>Freddie Mac</em> <a href="https://myhome.freddiemac.com/blog/homebuying/should-inflation-change-your-homebuying-plans" rel="noopener noreferrer" style="color: blue;" target="_blank">explains</a> how: </p>
<blockquote><p><em>“Not only will buying today help you begin to build equity,</em><strong><em> a fixed-rate mortgage can stabilize your monthly housing costs for the long-term even while other life expenses continue to rise </em></strong><em>– as has been the case the past few years.”</em></p></blockquote>
<p>Unlike rents, which tend to rise with time, a fixed-rate mortgage payment is predictable over the life of the mortgage (typically 15 to 30 years). And, when the cost of most everything else is rising, keeping your housing payment stable is especially important.</p>
<p>The alternative to homeownership is <a href="https://www.simplifyingthemarket.com/2023/05/01/why-buying-a-home-makes-more-sense-than-renting-today/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">renting</a> – and rents tend to <a href="https://fred.stlouisfed.org/series/CUUR0000SEHA#0" rel="noopener noreferrer" style="color: blue;" target="_blank">move</a> alongside <a href="https://www.usinflationcalculator.com/inflation/united-states-core-inflation-rates/" rel="noopener noreferrer" style="color: blue;" target="_blank">inflation</a>. That means as inflation goes up, your monthly rent payments tend to go up, too (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/content/images/20230523/20230524-rents-increase-with-inflation-most-years.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230523/20230524-rents-increase-with-inflation-most-years.png"/></a></p>
<p>A fixed-rate mortgage allows you to protect yourself from future rent hikes. With inflation still high, when your rental agreement comes up for renewal, your property manager may decide to increase your payments to offset the impact of inflation. Maybe that’s why, <a href="https://www.buildiumstaging.com/resource/2023-property-management-industry-report/" rel="noopener noreferrer" style="color: blue;" target="_blank">according</a> to a recent survey, <strong>73% of property managers plan to raise rents over the next two years</strong>.</p>
<p> Having your largest monthly expense remain stable in a time of <a href="https://www.simplifyingthemarket.com/2023/05/09/why-todays-housing-market-is-not-about-to-crash/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">economic uncertainty</a> is a major perk of homeownership. If you continue to rent, you don’t have that same benefit and aren’t as protected from rising costs.</p>
<h3>SBottom Line</h3>
<p>A stable housing payment is especially important in times of high inflation. Connect with a real estate agent so you can learn more and start your journey to homeownership today.</p>
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