Everyone is now feeling the pain of inflation which is causing just about everything you can think of becoming more expensive. Right now, inflation is at a 40-year high and according to the National Association of Home Builders (NAHB):

“Consumer prices accelerated again in May as shelter, energy and food prices continued to surge at the fastest pace in decades. This marked the third straight month for inflation above an 8% rate and was the largest year-over-year gain since December 1981.”

With inflation on the move, you are feeling the impact on your daily life as prices go up for groceries, gas, and more. These climbing costs can put a pinch on your wallet and make you re-evaluate big purchases. If you’ve been thinking about purchasing a home in Northern VA this year, you’re probably wondering if you should continue or if it makes more sense to wait. While the answer certainly depends on your situation, here’s how homeownership can help you battle rising inflation.

Stabilize Your Biggest Monthly Expenses

Don’t take my word for it, Investopedia explains that during high inflation, prices rise across the board. That’s true for things like entertainment, food and other consumer goods and services, even housing. We are seeing rental prices and home prices on the rise in Northern VA. As a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.

Buying a home allows you to stabilize your biggest monthly expense: your housing cost. When you have a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:

“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. That’s certainly not the case if you’re renting.”

Even if other prices increase, your mortgage payment will be a reliable amount that will help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.

Historically Outperforms Inflation

It is true that rising home prices and higher mortgage rates mean that buying a house today costs more than it did even a few months ago. However the long term benefits outweighs this short term rise in cost. That’s because, in inflationary times, you want to be invested in an asset that outperforms inflation and typically holds or grows in value.

The graph below shows how the average home price appreciation outperformed the average inflation rate in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):

Why is this important to those considering a home purchase in Northern VA?

Right now, experts and analysts forecast home prices will only go up from here thanks to the ongoing imbalance of supply and demand. Here is an article I wrote about supply and demand in Northern VA which still rings true, Northern VA Home Prices: It’s All About Supply and Demand.

Once you buy a house, any home price appreciation that does occur will grow your equity and your net worth. And since homes in Northern VA are typically assets that grow in value, you have peace of mind that history shows your investment is a strong one.

Bottom Line

If you’ve been thinking about buying a home in Northern VA this year, it makes sense to act now, even with rising rates. That way you can stabilize your monthly housing cost and invest in an asset that historically outperforms inflation. Give us a call and we can answer all your questions and see if buying works in your unique situation - Contact us Here.