In an annual Gallup poll, Americans voted real estate as the best long-term investment. And it’s not the first time it’s topped the list! Real estate has been on a winning streak for the past eight years, consistently gaining traction as the best long-term investment (see graph below):
If you’re thinking about purchasing a home this year, this poll should reassure you. Even when inflation is rising like it is today, Americans agree an investment like real estate truly shines.
Why Is Real Estate a Great Investment During Times of High Inflation?
With inflation reaching its highest level in 40 years, it’s more important than ever to understand the financial benefits of homeownership. 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.
If you’re a renter, you don’t have that same benefit. You aren’t protected from increases in housing costs like rising rents.
History Shows During Inflationary Periods, Home Prices Rise as Well
As a homeowner, your house is an asset that typically increases in value over time, even during inflation. That‘s because, as prices rise, the value of your home does, too. And that makes buying a home a great hedge during periods of high inflation. 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.”
Other than appreciation, there are other means to achieve income through real estate investment such as short or long term rentals, flipping or home renovations, and land development or purchases to build wealth. Many times real estate investing doesn’t share the volatility of the stock market.
Fun Fact: Real Estate investing has created 90% of the world’s millionaires!
Bottom Line
Housing truly is a strong investment, especially when inflation is high. When you lock in a mortgage payment, you’re shielded from housing cost increases, and you own an asset that typically gains value with time. If you want to better understand how buying a home could be a great investment for you, start a conversation with one of our agents today!
Keepingcurrentmatters.com (February 21, 2022) KCM Crew
