Owning a Home Helps Protect Against Inflation

Because of the increase in the cost of groceries, gas, and other items, you probably experience the effects of rising inflation every day. If you're a renter, you're probably dealing with it quite a bit since your rent keeps going up. You might be thinking if it still makes sense to purchase a home now in light of all of those increased costs and uncertainties around a potential recession. The quick response is yes. This is why. 

Homeownership actually shields you from the rising costs inflation brings.

Freddie Mac explains how: 

“Not only will buying today help you begin to build equity, a fixed-rate mortgage can stabilize your monthly housing costs for the long-term even while other life expenses continue to rise – as has been the case the past few years.”

A fixed-rate mortgage payment is predictable throughout the course of the loan (usually 15 to 30 years), in contrast to rents, which can increase over time. Maintaining a consistent housing payment is crucial, especially at a time when the price of nearly everything else is rising.

Renting is an option to owning a home, and rentals often increase in line with inflation. Accordingly, your monthly rent payments tend to increase along with inflation (see graph below):

With a fixed-rate mortgage, you can guard against future rent increases. When your lease is due for renewal, your property manager might opt to raise your payments to compensate for the effects of inflation given the current state of the economy. Perhaps this is the reason that 73% of property managers intend to raise rents during the next two years, according to a recent survey.

One significant benefit of owning is having your largest monthly payment remain constant during difficult economic times. You won't receive that benefit and won't be as insulated from price increases if you continue to rent.

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