🏡 How Does Inflation Impact Home Values?

Why This Matters

If you’ve been watching the news or checking prices at the store, you’ve probably noticed: things cost more than they used to. That’s inflation—and it impacts more than just groceries. It can also affect the value of your home and your long-term wealth strategy. Let’s break down what inflation really means, how it affects home prices, and how you can use it to your advantage.

 

💸 What Is Inflation?

Inflation happens when your money doesn’t stretch as far as it used to. It means prices are going up across the economy. Over the past year, core inflation has been around 2.9%—better than the 8% spike we saw in 2022, but still higher than what we were used to before the pandemic. For most of the past 20 years, inflation hovered below 2%. So even this “moderate” inflation feels like a big change.

This rise in prices is more than just inconvenient—it also shifts how we think about money, savings, and investing. And that brings us to real estate.

 

🏠 How Inflation Affects Home Prices

When inflation rises, home prices usually follow. Why? Because houses, like food or gas, are part of the economy. During the inflation-heavy years of 1970 to 1989, home prices rose an average of 7.64% per year. But during the lower-inflation years of 2000 to 2019, they rose just 3.70% annually.

This shows a clear pattern: when inflation is high, home values tend to grow faster. That’s why real estate is often seen as a hedge against inflation—it helps protect your wealth.

 

📈 How to Benefit from Inflation as a Buyer

The smartest move in a high-inflation market? Buy real estate—and lock in your mortgage. Your monthly mortgage payment stays the same, but the value of your home (and rent prices, if you’re a landlord) can keep rising.

Think of it this way: your mortgage is fixed, but inflation makes everything else—including wages and home values—go up. That gap creates long-term gains. So if you’ve been on the fence, this could be your moment to buy or invest.

 

✅ Final Thoughts

Inflation isn’t just something that makes things more expensive. It can also create opportunity—if you know how to use it. Real estate has historically been one of the best tools for building wealth in an inflationary economy. Whether you’re buying your first home or adding to your portfolio, now might be the right time to act.

 

Want help navigating your options in today’s market?
As a Certified Mortgage Planning Specialist, I’ll help you create a smart strategy tailored to your goals.
📲 Let’s talk.