Saturday, October 22, 2022 / by Laura Larson
As you watch the price of goods and services rise, you're probably already feeling the effects on your day-to-day existence. Should I still buy a property now, given the strain it's putting on my pocketbook and the oncoming economic uncertainty? Here is what you need to know if that question is on your mind.
Owning a home has historically been a fantastic inflation hedge.
Prices generally increase in an economy that has inflation. Owning a home has historically been an excellent way to protect yourself from those rising prices because you can fix what is probably your biggest monthly payment (your mortgage) for the life of the loan. This helps some of your monthly expenses remain stable. Bankrate's James Royal, a senior wealth management reporter, explains: “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.”
The capacity to maintain your monthly payments and guard against future rent increases may be even more crucial now that rents are so high. The National Association of Realtors (NAR) Chief Economist, Lawrence Yun, discusses what happened to rents in the most recent 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.”
A fixed home cost is the ideal inflation hedge. Get in touch with Laura Larson right away if you're prepared to find out more and begin the process of becoming a homeowner.