Here’s how you buyers and sellers can hedge against inflation.
The Federal Reserve recently announced a 0.75% interest rate hike to combat surging inflation—one of its biggest hikes in history. If you’re a homeowner or a buyer, what does this mean for you? Today we’ll talk about the best way to navigate the current market.
Inflation is currently higher than we have seen in the past several years, but real estate has historically been a great hedge against it. As inflation increases, so does the value of your property. If you’re a landlord, you can increase your rent to fight the effects of inflation.
Mortgage rates are still historically low. Now is still a good time to buy a home and lock in a lower rate; the Fed is scheduled to revisit interest rates in July. For homeowners, your mortgage payments decline over time during periods of sustained inflation. It’s important to consider how long you plan to stay in your home because closing costs can be expensive. If you don’t build enough equity to offset these costs, you could end up losing money when you sell later.
“Investing in real estate is a good way to hedge against inflation.”
An alternative investment option to consider is the real estate investment trust (REIT). REITs are managed by companies that own and operate properties. Investing in REITs can be a big advantage since their prices are not affected by rising rates as much as other investment opportunities are.
If you want to learn more about how you can invest in real estate to hedge against inflation, don’t hesitate to call or email me. I’ll be happy to help!
