While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate
is still high, remaining around 8%. This news impacted the stock market
and added fuel to the fire for conversations about a recession.
You’re likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The pinch it’s creating on your wallet and the looming economic uncertainty may leave you wondering: “should I still buy a home right now?” If that question is top of mind for you, here’s what you need to know.
Homeownership Is Historically a Great Hedge Against Inflation
In an inflationary economy, prices rise across the board.
Historically, homeownership is a great hedge against those rising costs
because you can lock in what’s likely your largest monthly payment (your
mortgage) for the duration of your loan. That helps stabilize some of
your monthly expenses. James Royal, Senior Wealth Management Reporter at
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
And with rents
being as high as they are, the ability to stabilize your monthly
payments and protect yourself from future rent hikes may be even more
important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains what happened to rents in the latest inflation report:
“Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.”
When you rent, your monthly payment is determined by your lease,
which typically renews on an annual basis. With inflation high, your
landlord may be more likely to increase your payments to offset the
impact of inflation. That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.
Becoming a homeowner, if you’re ready and able to do so, can provide
lasting stability and a reliable shelter in times of economic
The best hedge against inflation is a fixed housing cost. If you’re
ready to learn more and start your journey to homeownership, let’s