This article is about how owning a home will protect you against inflation.  I, of course, agree with that.  But, owning a home has more benefits than the inflation factor.  As I see it, these are the major financial benefits.  Let' assume a home that is worth $600,000 today.


#1  Assuming an annual 3.0% increase in home value, this home's value will increase $18,000 , the first year.  After 5 years, it will be worth $695,000.  After 10 years, it will be worth over $800,000.  Not a bad return.

#2  Assuming one is in the 25% tax bracket, there will be a substantial reduction in income taxes.  For an adjusted gross income of $100,000, the reduction in federal income taxes will be about $8700 per year.  That's assuming an interest deduction of about $30,000 and a tax deduction of about $5000.


So, the financial benefit in year one would be $26,700.  After year 5, $138,500 ( $95,000 + $43,5000).  And, after year 10, $287,000 ( $200,000 + $87,000).


Of course, these are estimates, assuming a stable market over the next 5 to 10 years.  There will probably be some ups and downs.  But, I do believe that assuming a 3% annual increase in home value is more than realistic.  It could easily be far more.

Owning a Home Helps Protect Against Inflation

You’re probably feeling the impact of high inflation every day as prices have gone up on groceries, gas, and more. If you’re a renter, you’re likely experiencing it a lot as your rent continues to rise. Between all of those elevated costs and uncertainty about a potential recession, you may be wondering if it still makes sense to buy a home today. The short answer is – it does. Here’s why. 

Homeownership actually shields you from the rising costs inflation brings.

Freddie Mac explains how: 

“Not only will buying today help you begin to build equity, a fixed-rate mortgage can stabilize your monthly housing costs for the long-term even while other life expenses continue to rise – as has been the case the past few years.”

Unlike rents, which tend to rise with time, a fixed-rate mortgage payment is predictable over the life of the mortgage (typically 15 to 30 years). And, when the cost of most everything else is rising, keeping your housing payment stable is especially important.

The alternative to homeownership is renting – and rents tend to move alongside inflation. That means as inflation goes up, your monthly rent payments tend to go up, too (see graph below):

A fixed-rate mortgage allows you to protect yourself from future rent hikes. With inflation still high, when your rental agreement comes up for renewal, your property manager may decide to increase your payments to offset the impact of inflation. Maybe that’s why, according to a recent survey, 73% of property managers plan to raise rents over the next two years.

 Having your largest monthly expense remain stable in a time of economic uncertainty is a major perk of homeownership. If you continue to rent, you don’t have that same benefit and aren’t as protected from rising costs.

Bottom Line

A stable housing payment is especially important in times of high inflation. Let’s connect so you can learn more and start your journey to homeownership today.