A recent survey conducted by Gallup has shown that the number of Americans who feel real estate is a good investment in climbing. The survey showed that real estate is viewed as the best investment to make in America for the ninth year in a row. But these results also showed that more survey takers chose this than ever before.
Gallup has run this particular survey on an annual basis and has asked this particular question about investment dollars since the year 2011. Looking back at all of the survey results over the past decade there is a clear increase in people’s viewpoints toward the positivity of purchasing real estate as an investment.
Even in times of high inflation where expenses are high for daily living needs purchasing real estate is still a smart decision. Many Americans are continuing to recognize that owning a home is a sound financial move.
How purchasing real estate can benefit a buyer during a time of high inflation
Numbers show that inflation has reached its highest level over the last 40 years. It is a good idea to know the benefits of becoming a homeowner. An increase in prices across-the-board with inflation means that many items are seeing price hikes including goods, services, housing costs, and almost everything you could think to purchase.
The huge benefit of purchasing a home right now is the ability to lock in a stable monthly housing payment with a fixed-rate mortgage. There is no rising rent cost. The housing bill is a majority of Americans’ cost of living. It is expected that rents are going to continue to increase as inflation increases because this increases the cost of being able to provide the necessities of a rental property to a tenant for the landlord.
In the past, as inflation rises home prices have risen
Real estate is an asset that increases in value with time unless there is an unforeseen downturn. As prices rise all over the economy home values rise with them. Investing in real estate can act as an inflation hedge because there will always be a need for homes no matter the current economic climate.
An increase in your home value means an increase in the equity that your home holds and this translates to an increase in your overall net worth or financial portfolio. Over the course of history, it has been shown that investing in real estate is a smart way to hedge against inflation. Even if home values should take a dip there are several homeowners that would still retain a significant amount of equity in their homes.
Equity is the difference between the current fair market value of your home and the amount of money that you owe your mortgage holder on that property. If you purchased a property for $300,000 and have paid down $20,000 and now owe $280,000 but the current fair market value of your home is $600,000 you now have $320,000 in equity. And in today’s world, you would be considered equity rich because there is more equity in your home than the amount you owe on it. This puts a homeowner in a very good solid place financially.
A healthy amount of equity coupled with a lower mortgage payment than current rent prices puts you in a good position to weather through the inflation storm.
Though mortgage rates have increased you could still save much more money purchasing now than waiting it out in hopes that home prices will take a hit. There’s no guarantee that mortgage prices will go down anytime soon so purchasing a home now with a lower mortgage interest rate than in the future would still be more beneficial as far as monthly mortgage costs go.
For more information on purchasing a home along the Forgotten Coast please contact us any time.
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