It’s no surprise in an annual Gallup poll, Americans chose real estate as the best long-term investment. And it’s not the first time it’s topped the list, either. Real estate has been on a winning streak for the past eight years, consistently gaining traction as the best long-term investment.
What does high inflation mean for real estate investments?
Even when inflation is rising like it is today, Americans agree an investment like real estate truly shines. Rising inflation means prices are increasing across the board. That includes goods, services, housing costs, and more. But when you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increasing housing payments. James Royal, senior wealth management reporter at Bankrate, explains it like this:
“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.”
Natalie Campisi, advisor staff for Forbes, notes:
“Tangible assets like real estate get more valuable over time, which makes buying a home a good way to spend your money during inflationary times.”
On the other hand, renters don’t have the same benefit and aren’t protected from increases in housing costs. If possible, renters should try to avoid being trapped in rising rates out of their control. The national median rent increased 17.8% in 2021 and is projected to continue upwards throughout 2022.
Housing truly is a strong investment, especially when inflation is high. When a homeowner locks in a mortgage payment, they are shielded from housing cost increases, and own an asset that typically gains value with time. To better understand how buying a home could be a great investment, connect with a local real estate advisor today through the Alabama Association of REALTORS®.