At Home with Team Gabriel

How inflation affects homeowners and buyers in our real estate market.

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We keep hearing about inflation in the news lately. It always carries a negative connotation because we don’t want things to cost more if we’re not making more money. However, when it comes to real estate, inflation isn’t such a bad thing. Investing in real estate is actually a good way to hedge against inflation.

If you own your home and have a fixed-rate mortgage, you’re golden. You’re building equity as the value of your home goes up. This price increase isn’t costing you anything, so inflation can be good if you own real estate for a long period of time. It’s a great thing for investors, too, because increased inflation means you can charge more for rent.

However, inflation can be problematic for buyers. Home prices, interest rates, and the cost of building materials will all increase during inflationary periods. But don’t let that stop you from buying a house.

"When it comes to real estate, inflation isn't such a bad thing."

Interest rates are still near historically low levels. Lawrence Yun, the chief economist for the National Association of Realtors, recently said that real estate is the best hedge against inflation. Housing prices are rising faster than inflation and have been for the last 50 years. The cost of all building materials has risen, and new construction will cost you a bit more these days. The experts also predict that home values will increase by up to $100,000 on a $350,000 house over the next five years.

If you’re concerned about inflation and rising interest rates, now might be a good time to invest in real estate. If you have any questions about buying, selling, or real estate in general, feel free to call or email us. We’d love to help.