Buying A House Wins Best Investment Again
An annual Gallup poll is put out every year asking Americans to choose the best long-term investment. Again, Americans chose real estate as the top choice by quite a bit.
The survey showed real estate at the top with 41%. Stocks were right behind at 26%, while gold came in third with 18% of the vote. Maybe this is the year you invest in a new home in Madison.
What Makes Buying a Good Investment Right Now?
Normally, buying a home is considered a good investment because you can build equity. This is about as simple as it can get. However, during the current times with higher inflation than normal, owning a home makes for an even better investment.
When inflation is on the rise, prices increase all across the board. This means everything from the gallon of milk you buy to the fast food you pick up to the cost of maintenance on your car. Even the price to buy a home will go up.
Having your monthly payment locked in can help to shield you from inflation. If you have a fixed-rate mortgage, you won't have to worry about paying a higher monthly cost for housing. Renters don't get this benefit. When their lease is up (usually every year) the rent will likely go up to cover the rising cost of house maintenance.
Inflation Equal Higher Home Prices
We have already seen this happen a bit, recently, but it might not be tied directly to inflation. Home prices have been on the rise for a few years now, mainly due to the pandemic and lack of inventory. However, home prices have been known to go up quite a bit during inflationary periods throughout history.
While you might not have any reason to sell a home during an inflationary period, buying a home gives you a good hedge against high inflation. As inflation hits, prices for homes go up and tangible assets gain value.
As reported by CBS News, inflation saw the highest gain since 1982. While 7% might not seem like a lot, some areas, such as used cars and trucks saw a price increase of 37%.
Rising Inflation Sends Consumers Looking for Protection
In times of higher inflation, consumers look for a way to protect their money. Many will look for safer investments, such as gold, silver, and other precious metals. They may see the stock market and more traditional investment vehicles as too risky.
Real estate becomes a better choice, too. While buying a home isn't always seen as an investment, high inflation might have some buying to hold onto the money they have saved. They may not see it as safe to leave their savings in other forms of investment. Some might even buy a rental property or an investment property during this time.
There are many good reasons why Americans voted real estate as the best investment for the eighth year in a row. Right now, it might be an even better investment than it has been in the past. With rising inflation and rising home prices, it's likely a good time to buy before mortgage rates go up.