A house will cost more today than it would have a year ago because of higher rates and home prices. But investing in a home now, if you’re financially prepared to do it, gives you the chance to lock in a monthly mortgage payment before rates and prices rise again.
This is fairly standard financial advice during periods of inflation (though it’s always important to speak with your financial advisor). Investing in an asset that is expected to increase in value can help to build your prosperity, achieving your dream of homeownership at the same time.
“If you have cash and are expecting inflation, you want to think through where you can put your money so it does not lose value. Housing is commonly looked at as a good inflation hedge…” Ali Wolf, Zonda Chief Economist, says.
It’s important to point out that once you become a homeowner, your monthly payment may stay relatively fixed, but your property value is likely to increase. This means that, for most of today’s new homeowners, you may quickly see a return on your investment.
The average homeowner has gained $64,000 in home equity in the past year. The average homeowner also has a net worth of more than 40-times that of a renter, according to the latest available numbers. These numbers simply underscore how homeownership can help to build prosperity, providing added protection in times of inflation.