protect your purchasing power by stabilizing your housing payments

When the cost of food, gas, and basically everything else keeps increasing... you don't want the same thing to happen to your housing payments. That's why home ownership can be such an important tool. In this video, Brent explains more about how to protect your purchasing power by leveraging home ownership.

More of a reader? Catch the video transcript below!

Today I want to talk about inflation and how homeownership is a great hedge against it. We’ll go into what inflation is when it comes to the real estate market, how homeownership can stabilize your payment, and how investing in an asset that outperforms inflation can help protect your wealth against the weakening power of the dollar.

What is inflation?

Simply put, inflation is nothing more than the cost of goods and services going up. Now, a certain amount of inflation is good for the economy because it indicates that it is stimulated and growing.

However, when inflation is going up too fast too soon, the purchasing power of your dollar diminishes. So, when they say inflation is up 9%, that means what cost a dollar last year now costs $1.09. In an environment where inflation is going up, how do we keep our money from eroding?

How can owning a home help in an inflating economy?

Imagine if you’re a renter approaching the end of your lease and the landlord says he’s raising your rent by 10%. You just experienced inflation!

A great way that homeownership can help protect your money is through a fixed mortgage. A fixed mortgage means that your payment stays the same over the term of the mortgage. Yes, you may see your property taxes increase or your insurance rate goes up, but for most people, their mortgage is the biggest part of their personal budget.

So, if you buy a home, you protect yourself from the landlord coming in every year to increase your rent! This will allow you to stabilize the biggest piece of your personal budget.

Can the value of my home outpace inflation?

A home is an asset that typically outpaces inflation. So, another way we can protect our money from eroding as the prices of things go up is to invest in assets that increase in line with or faster than inflation.

By doing this you are sticking your investment dollars in an asset that’s growing, and it’s growing at a faster rate than your dollar is eroding, which means you are actually getting wealthier.

Pro Tip of the Day

While inflation happens every year, it’s more important now than ever to protect your wealth.

If you can protect the biggest line item in your budget from rising costs, and you invest in an asset that outpaces inflation, you can build more wealth in the long run.

That’s going to be it for me today, guys. See you in the next one!

Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.