How investing in US real estate can help protect you from inflation

How investing in US real estate can help protect you from inflation

If you're following the news today, you've probably heard about the rising inflation.

You are probably also feeling the impact on your life everyday life as prices for gas, groceries, and more rise.

These rising consumer costs can hurt your wallet and make you reevaluate any big purchases you have planned to make sure they are still worthwhile.

If you are thinking about buy a house this year, you are probably wondering if should continue on this path or does it make more sense to wait.

Although the answer depends on your situation, here's how home can help you combat the rising costs that accompany inflation.

Home ownership offers stability and security

Investopedia explains that during a period of high inflation, prices rise across the board. This goes for things like food, entertainment, and other goods and services, even housing.

Both the rental prices how much house prices are on the rise.

So as a buyer, how can you protect yourself from rising costs? The answer lies in home ownership.

Buying a house allows you to stabilize what is usually your biggest monthly expense: the cost of housing.

If you can get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loangenerally from 15 to 30 years.

James Royal, Senior Reporter for Wealth Management at Bankrate, says:

"A fixed-rate mortgage allows you to keep most of your living expenses with the same payment. Sure, property taxes will increase and other expenses may increase, but your monthly housing payment remains the same." 


Therefore, even if other prices go up, your housing payment will be a reliable figure that can help keep your budget under control.

If you rentYou will not get the same benefit and you will not be protected from rising housing costs.

Use house price appreciation to your advantage

While it is true that the increase of mortgage rates e house prices mean that buying a house today costs more than it did a year ago, you still have the opportunity to set yourself up for a long-term win. Buying now allows you to lock in today's rates and prices before both go higher.

In times of inflation, it is especially important to invest your money in an asset that traditionally maintains or grows in value. The chart below shows how house price appreciation has outpaced inflation in most decades since the 1970s - making home ownership a historically strong hedge against inflation (see the chart below):

So what does this mean for you?

Today, experts say that house prices will continue to rise as price pressure stems from a continuing imbalance between supply and demand.

After buying a house, any house price appreciation that occurs will be good for your heritage and your net equity.

And since houses are typically assets that grow in value (even in times of inflation), you are sure that history shows that your investment is strong.


How can buying a property in the United States protect me from inflation in Brazil ?

If you do not live in the United States you may be wondering what this post has to do with you, after all, your home of your own is not here, but in Brazil.

But historically Brazilian inflation loses out to the appreciation of the American currency, that is, when you buy a house as an investment in the United States, besides having an income in hard currency you protect your assets from inflation in Brazil.

Another great advantage of investing in real estate in the United States is the possibility of making this investment in a leveraged way, that is, financing the property. This is only possible because real estate interest rates in the United States tend to be lower than the annual profitability of real estate.

Since the financing bank does not gain anything from the appreciation of the property, the real estate appreciation will leverage your equity even more. Imagine the scenario where you financed your investment giving only 1/3 of the value of the property and that after one year the property appreciated in value by 5%, your equity in this example will have appreciated by 15%.

See an article with more arguments:  3 Charts that show we are not in a real estate bubble


If you are ready to buy a house, it may make sense to go ahead with your plans, despite rising inflation. If you want expert advice on your specific situation and how to time your purchase, let's connect.

Are you in doubt?

Now that you know a little more about how buying a property in the United States can help you escape inflation, you can consider investing in vacation homes in Orlando. To take advantage of all the tips we have brought to you and to go even deeper, you can talk directly to our relationship agents. They are always happy to talk to you with any questions you may have about investing in Florida.

In this text we approached the theme the behavior of the real estate market during recessions because it is interesting for those looking to invest in Florida. If you want to read more content like the one we brought in this article, just stay tuned here on our blog.

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