Everything seems to be getting pricier these days. This is mainly due to inflation staying elevated for longer than we anticipated, which affects the prices of goods and services. With costs on the rise, you might be wondering if now is truly the best time to buy a home.

Owning a home is actually a smart way to shield yourself from the increasing costs that come with inflation.

A Fixed-Rate Mortgage Shields You From Increasing Housing Expenses

A major advantage of owning a home is that when you purchase with a fixed-rate mortgage, your main monthly expense—your mortgage payment—remains consistent. While your payment might vary a little due to changes in homeowner’s insurance and property taxes, your principal and interest payments will stay the same, regardless of inflation.

If you're renting, that's a different story. Rent often increases over time, and it typically rises quicker than inflation. You can check the data from the Bureau of Economic Analysis and the Census Bureau for more details.

Renters are seeing their costs go up every year, but homeowners with a fixed mortgage rate can count on their monthly payments staying the same. This setup makes it simpler to plan their budgets, regardless of inflation changes.

Home Prices Generally Increase At A Rate That Outpaces Inflation.

One significant reason why owning a home is a solid defense against inflation is that home values usually increase over time. In fact, they often appreciate at a rate that's higher than inflation, based on data from the BEA and Fannie Mae.

Real estate tends to be one of the best long-term investments when prices are increasing. Unlike cash savings, which can lose value due to inflation, real estate usually either retains its value or appreciates over time, helping you build your wealth.

Renting doesn't provide any shield against inflation. In reality, it can do quite the opposite. When inflation pushes costs up, landlords typically respond by raising rents, which means tenants end up feeling the pinch.

As a renter, you're consistently shelling out more money without getting any financial payoff. On the flip side, when you're a homeowner, those rising prices can actually benefit you by boosting your home's value and growing your equity as time goes on.

With experts predicting that home prices will keep rising, you're essentially making an investment that tends to increase in value and should do better than inflation as time goes on.

A fixed-rate mortgage helps you stick to a budget, while the increasing value of your home boosts your net worth. That's why owning a home is a solid way to guard against inflation.

Bottom Line

Inflation can be tough on daily expenses, but having a home can provide you with some stability. Unlike renting, your monthly mortgage payment tends to remain consistent over the years. Additionally, the value of your home is likely to rise after you purchase it.

How would having a set monthly housing payment affect your budgeting for the future?