In an annual Gallup poll, Americans chose real estate as the best long-term investment. And it’s not the first time it’s topped the list, either. Real estate, especially Boston real estate, has been on a winning streak for the past eight years, consistently gaining traction as the best long-term investment (see graph below):
If you’re thinking about purchasing a Boston condo or home in a nearby area, this poll should be reassuring. Even when inflation is rising like it is today, Americans agree an investment like real estate continues to provide excellent return.
Why Is Boston Real Estate a Great Investment During Times of High Inflation?
With inflation reaching its highest level in 40 years, it’s more important than ever to understand the financial benefits of homeownership. Rising inflation means prices are increasing across the board. That includes goods, services, housing costs, and more. But when you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increasing housing payments. James Royal, Senior Wealth Management Reporter at Bankrate, explains it like this:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
If you’re a renter, you don’t have that same benefit, and you aren’t protected from increases in your housing costs, especially rising rents. Additionally, you don't have the benefit of using property taxes, interest, and mortgage as annual tax deductions.
History Shows During Inflationary Periods, Home Prices Rise as Well
As a homeowner, your house is an asset that typically increases in value over time, even during inflation. That‘s because, as prices rise, the value of your home does, too. And that makes buying a home a great hedge during periods of high inflation. Natalie Campisi, Advisor Staff for Forbes, notes:
“Tangible assets like real estate get more valuable over time, which makes buying a home a good way to spend your money during inflationary times.”
Bottom Line
Housing is a strong investment, especially when inflation is high. When you lock in a mortgage payment, you’re shielded from housing cost increases, and you own an asset that typically gains significant value over time. Condos in Boston, especially, have seen a steady increase in value over the last decade, and experts predict that this trend will persist. If you want further information about real estate investing, please contact us.
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