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Houston Broker Team

Impact of Rising Inflation on Real Estate Investment

Should I invest in real estate with the rising inflation? This is a very hot topic right now. In October of 2021, the annual inflation rate rose to 6.2%. That’s the highest that it’s been since November of 1990, over 30 years ago ! It’s a huge increase from the manageable 2% that we’ve enjoyed for the past five years. Assuming a 6.2% inflation rate, this means that $100 today will be worth $74 in 5 years. Inflation is when the prices of goods and services rise causing a decrease in the purchasing power of the money that you have for spending. A couple of factors affecting inflation include government aid during the covid-19 pandemic, supply chain issues occurring around the globe and worker shortage in just about every industry.

So where am I putting my money? In Real Estate, and here’s why:

● The prediction is that prices will increase around 13% in the coming year.

● Right now, we know that interest rates are at an all time low, but they will be increasing this year to adjust to inflation. The sooner you can lock a lower interest rate, the sooner you will be protecting your money against rising inflation.

● Appreciation of the asset is another good reason to invest in real estate. According to the Federal Reserve, the median sales price of houses sold in the U.S. has increased by 345% since Q3 of 1990. Looking at more recent data it was nearly 20% since Q3 2020.

● Finally, there are tax benefits associated to owning real estate through asset depreciation.

Interested in investing in real estate? Contact me today!

Houston Broker Team
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