Is Buying a Home a Hedge Against Inflation?

Over the past few years, the US economy has been healthy in terms of macro-economics. But a lot of Americans have still been having a hard time, in part because of how much inflation there has been. As we progress into the future, you may be wondering if buying a home can act as a hedge against inflation.

The answer to this question is yes. There are a couple of reasons why buying a home can help hedge against inflation.

Home Values Tend to Rise

One of the reasons that buying a house can help you hedge against inflation is that the values of homes tend to go up alongside inflation.

So, yes, other things will cost more, and life will get more expensive. But the equity in your home will also be worth more. So, that portion of your wealth will have increased in such a way as to keep pace with inflation, rather than its value being watered down by it.

You can contrast this with other types of investments, which can lose value due to inflation.

Now, it is not a guarantee that homes always go up in value. Some markets stay depressed. And there are periods of time when houses tend to fall in value at least for the short-term.

But in general, over the long-term, home values do tend to climb. You can look back at decades’ worth of home value graphs to see this for yourself. So, if you buy a home as a long-term investment, there is reason to believe it is likely to pay off.  

Rental Opportunities Can Pay Off

Just as home values tend to go up over time, the same is also true for the cost of rent. That is bad news for you if you are a renter. But it is great news for you if you own a rental property or vacation home, and are able to accept tenants. It means that even though your own living expenses may be climbing, the higher rental income you are bringing in can help to offset those rising costs.

Buy a Home in Washington State or Colorado

Inflation can make it challenging to afford your bills, groceries, and everyday expenses. But investing in a home or rental property is a great way to hedge against inflation with an investment that is likely to rise alongside the cost of living.

During your consultation, Blue Square Mortgage experts can help you to understand the short- and long-term financial implications of buying a home. We can also assist you with choosing a mortgage that will maximize your return on your investment, helping you to build your wealth and achieve your financial goals.

If you are ready to get started, please give us a call at (206) 352-6453. Blue Square Mortgage works with homebuyers and homeowners throughout the states of Washington and Colorado. We can help you buy a home or refinance.