Here’s why owning real estate is a good hedge against inflation.
If you’ve been watching the news, then you know inflation is on everyone’s minds. So how does inflation affect real estate? Let’s talk about it.
First things first—what is inflation anyway? Inflation is when the cost of goods increases. Put simply, it costs more money to buy things, including gasoline, groceries, and even houses. In the United States, we typically see 2% inflation year over year; however, over the last 12 months, we’ve seen inflation of over 6%. The Federal Reserve is concerned about this, but if you own real estate, inflation could actually work in your favor.
When you own a home you live in, and the value of your home increases, you build equity. The same thing occurs if you own rental property. During an inflationary period, you build equity at a faster rate since the price of homes increases. While none of us want inflation to happen, owning real estate is considered a strong hedge against it.
If you are looking to diversify your portfolio with real estate, give me a call or shoot me an email. I would love to talk about your options with you.