Homeownership: Your Life Vest for Inflation – Houses to Homes Podcast

When inflation goes up, most day-to-day or month-to-month costs go up out of our control. But owning a house with a mortgage keeps the (most likely) biggest expense on your monthly budget right in place, protecting you from paying more like you would with rent. Because of this, if you can afford to buy a home instead of renting, it may be much more beneficial for you to do so.

You can listen to this Houses to Homes Podcast episode on Spotify, Apple or Google Podcasts: 

Transcript:

So I wanted to talk today about inflation.

A lot of our buyers are freaking out about pricing, interest rates, whatever. And if you've watched our previous podcast, you'll hear me make a reference to a glass half empty, half full. At the end of the day, it's still four ounces, so we have four ounces of water. You have a need for four  ounces of water – I have to have a house to live in.

Right.

That's where you say- 

Most likely.

Perfect. So you have 2 options well, really, three options. You can live with your parents in their basement. You can rent or you can own. And right now, we're facing escalating inflation rates. It's like the highest it's been in, what, like 30 or 40 years. I think they say 40 years right? It’s the highest it’s been. So a lot of people are saying, well, no, I'm not going to buy, I can't afford to buy. Inflation, this cost to this cost of that. But what people have a tendency to not look at is buying a house is actually a way to wear a safety jacket or a life vest. The one thing that you can control is your housing cost, you know, so while everything's going up. However - what is the inflation rate right now, do you know?

I'm not sure. They just raised it.

So I think it's like 20, 30%. Yeah, it's a huge amount. Yeah. So most people, if you break down your budget, your household budget, the majority of your cost is your actual housing.

Right.

So when we have inflation, everything goes up. Your electric bill, your gas bill, your auto gas, your food. Everything's up, up and up. Nothing goes down in inflation. 

Yep.

Even interest rates are going up right now. We're still seeing an increase in home values, which is why some people are saying maybe not the right time to buy. But if you look at it like this, everything's going up. So if I buy tomorrow, I'm probably buying it for less than what I'm going to buy in a month, right? 

Mm hmm.

So buying right now is going to trap me in on the price of the home today or tomorrow or next week whenever I buy it. So what that does, is it kind of locks in the one thing I can control, I can control my housing costs. If I'm renting every single year my landlord has the right to increase my rental rates. And if I decide to move to another place, guess what? I'm probably going to end up paying even more unless I decide to downsize. And even at that point, depending just on how much inflation goes up, I still may end up paying more. And a lot of people found themselves in that situation with their rent going up, especially after COVID and the, you know. Housing inventory crisis. Lots of people are finding and I know several people that are like, I know what the cost of my apartment is this month, but I'm renewing here in two months. And I just saw what the neighbors’ is worth.

I actually sold to couples that lived in that happened to live across the apartment complex from each other. Their rent had gone up $300 in a year and they ended up buying and their mortgage ending up being less than what they were paying in rent. But now more than saving money, they've gained control over their finances. 

Exactly.

It's like a safety net, you know, it's going to be X amount, right? So food may go up 20%. So your budget might go from $200 a week to $240 a week. But guess what? Your mortgage is still going to be that $1,500 or $2,000. Whatever your mortgage rate is, that's not going to change unless you make the physical thought out, purposeful intent to remortgage. And at that point, you're doing it because you're getting a lower interest rate or because of some major life circumstance. 

Exactly. 

So we can't control inflation, but we can control how it affects our lives. And that's the one thing that I really want to make sure all of our homebuyers and our home sellers understand. That's the one thing that you can take control of, the biggest expense that you have on your monthly budget. And if you need to know how to do that, call me. Call Lauren. We'll show you how to do it. 

Exactly.

You didn't talk much.

Well, you were on a roll.

Well interrupt me.