Is Homeownership a Hedge Against Inflation?

[Jorge Vazquez]

Below are a few reasons homeownership is an excellent hedge against inflation:

Increased property value: Being a homeowner in times of inflation means your property’s value should also increase, offsetting inflation.

Low fixed-rate mortgage: When the 30-year fixed mortgage in the U.S. is down is a good time to take out a loan. An increase in inflation rates will mean a corresponding increase in mortgage rates. Homeowners who have locked in low, fixed mortgage rates won’t have to deal with paying higher interest rates down the road.

A rent increase won’t affect you: For those renting, worsening inflation entails higher housing costs. Rent will cost significantly more each month at the end of rental agreements. Inflation will exacerbate rent increases, which have been known to surge by almost 50% in some cities. As a homeowner, you won’t have to worry about increasing rental and mortgage prices, especially with a fixed-rate mortgage.

Increased rents mean profits for property owners: If you own a rental property, increased rents during inflation mean added income. The rent increase for your rentals can also be used as payment for your mortgage.

Let me know your thoughts!