Homeownership January 10, 2022

What Effect Does High-Inflation Have on Housing?

The news is full of stories about how rising prices will affect your wallet. Naturally, if you’re thinking about purchasing a home this year, inflationary concerns like increasing consumer costs and supply chain “woes” make you wonder if you should wait to buy.  Investopedia explains that prices rise across the board during a period of high Inflation. Understandably, the cost of homes isn’t resistant to this increase, but read on to learn why Inflation shouldn’t stop you from buying a home in the future.

Homeownership Offers Stability and Security

Home prices have been increasing for the past several years, and market analysts say that they will continue to climb throughout the following year. As a buyer, it is important to protect yourself from the rising costs of food, shelter, entertainment, and other goods and services. The answer to hedge against Inflation lies in housing.

Buying a home and securing a fixed-rate mortgage allows you to lock in your monthly mortgage payment for years to come. That means, as other prices rise, your fixed-rate mortgage monthly payment will be consistent and locked. With the bulk of your payment locked, this gives you the peace of mind that most of your housing costs, the mortgage payment portion, are protected from Inflation.

James Royal, Senior Wealth Management Reporter at Bankrate, says:

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.”

If you rent, your payments are not locked in, and your rent will likely increase over time. Something to consider, today’s mortgage interest rates are lower than they have been in decades. While Inflation decreases the amount that your dollars can buy, low mortgage rates help balance the financial picture by boosting your purchasing power, enabling you to get more home for your money. Low-interest rates keep your monthly payments down.   

Bottom Line

Hopefully, this explanation of Inflation vs. Housing Costs was helpful. The best hedge against high Inflation is securing fixed housing. In the end, don’t let Inflation scare you from buying a home this year. If you have any questions, don’t hesitate to get in touch with me, I love to talk strategy and real estate!

About The Plane Team

Dena Plane has served her clients and provided them with excellent service for over 15 years in residential real estate, both resale and new home sales. As a resale agent, Dena has achieved Agent of the Month, Top Ten Agent of the Year, Multi-Million Dollar Club and International Diamond Society. As the sales manager for new homes, Dena personally sold over 300 homes and custom lots in the luxury golf communities of Prescott and Prescott Valley, Arizona.

Dena is licensed in both Arizona and California and specializes in luxury properties with resort-style living. With a passion for home building and interior design, Dena will help you get your home “show ready” and can easily guide and advise both buyers and sellers on the best practices for a successful outcome!

Currently, Dena has teamed up with her husband Dave, as The Plane Team, helping agents increase their production and grow their business and serving buyers and sellers in their real estate transactions. As your REALTOR’s, Dena and Dave will guide you through the buying and selling process and help you reach your real estate goals! The Plane Team will provide you with the resources and tools for a successful and smooth transaction.