How Buying a House Makes Inflation Work For YOU
Have you ever wondered how buying a house can work like a sneaky little magician, freezing inflation and potentially boosting your financial mojo? Well, let's take a stroll through the magical world of real estate and discover how homeownership can be your secret weapon against inflation.
You see, inflation is that pesky monster that causes the prices of goods and services to rise over time. It eats away at the purchasing power of your hard-earned money, making that delicious cup of coffee or those trendy sneakers cost more and more each year. But fear not! Buying a house can be your shield against this ferocious creature.
When you purchase a home, you essentially lock in your housing costs, at least to some extent. Sure, you have to deal with mortgage payments, property taxes, and maintenance expenses, but hear me out. While other costs in the world around you may be soaring due to inflation, your mortgage payment remains the same month after month, year after year (unless, of course, you refinance or adjust your mortgage terms).
I bought my house in 2017 for $395,000 and now in 2023 it is worth approximately $500,000.
Think about it. Imagine you buy a house with a fixed-rate mortgage. You're paying, let's say, $1,500 per month. Fast forward a few years when inflation has crept up, causing rents to skyrocket. Your neighbor in the rental next door is pulling their hair out because their rent has jumped to $2,000 per month. Meanwhile, you're sipping your coffee, enjoying the fact that your mortgage payment hasn't budged. It's like having a secret superpower against inflation.
One of my friend’s parents has been renting the same house for 30 years. When they first moved in, their rent was under $500/month. They are now paying over $2000 per month. If they would have purchased that house 30 years ago, they would be mortgage free and have an asset worth half a million dollars.
As time goes by, the value of real estate tends to rise (we're talking about the long term here). So while you're sitting in your cozy home, diligently making your mortgage payments, the market is doing its thing, potentially increasing the value of your property. It's like watching a rabbit multiply inside a hat!
Now, I must sprinkle a dash of reality here. Real estate markets can be fickle, and prices don't always go up. They can fluctuate and even decline in certain situations. But hey, over the long haul, history shows that real estate tends to appreciate. So, not only are you living in a place you can call your own, but you also have the potential to build wealth and potentially sell your property at a profit down the road. Cha-ching!
Of course, buying a house is a big decision, and it comes with responsibilities and financial commitments. It's important to do your due diligence, consider market conditions, and ensure you're financially ready for the journey. But if you're in it for the long haul and willing to put down roots, homeownership can be an excellent way to protect yourself from the ravages of inflation and maybe even build some serious wealth along the way.
So, my friends, the next time you hear the whispers of inflation haunting your wallet, remember the magic of buying a house. It's like freezing time, where your mortgage payment remains steady, while the rest of the world dances to the tune of rising prices. Who knew homeownership could be such a powerful spell against the claws of inflation? Happy house hunting, and may your financial magic forever prosper!
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Juliana Tardif
”Money is a tool, use wisely”
