Your analysis describes exactly how my wife and I benefited during the high-inflation, high interest rate environment in the early 1980’s. We got our house at a relatively low price in 1983 with a mortgage at 12-3/4 % rate. The low price was because of various factors, one of which was high interest rates. Within 8-10 years, we’d refinanced the rate down to 8-1/4 % for 15 years. (Unlike a high purchase price, which can’t be renegotiated, the high interest rate can be lowered through refinancing.) So in 2007, we paid off the mortgage and have lived practically cost-free since then. Of course, utilities, maintenance and insurance costs continue.
Larry is certainly correct when he reminds readers that mortgage rates are currently negative after inflation and home prices have historically kept up with inflation over the long-run. These conditions, all else equal, may make buying and maintaining a home a good "investment" and hedge against inflation. That said, buying and maintaining a home that is too expensive given your lifetime resources is NOT going to protect you against long-run inflation--it's going to do the opposite! Remember, operating costs for your home, including taxes, insurance and maintenance, will keep pace with or outpace inflation over time. So, yes, with inflation as high as it is today, short-term borrowing costs are certainly favorable. But, when it comes to buying a home, the most important thing is not interest rates but rather knowing what is affordable and not overextending. Here's more on the subject: https://lyonfp.com/blog/how-much-house-can-you-afford
Larry, Your last paragraph ("The government is, in short, broke and resorting to the printing press rather than politically painful fiscal discipline. That portends more inflation, against which a home provides excellent protection.") is a mix of hope and despair. For those who own their homes or can afford to buy, there is hope that home ownership can provide the protection you describe. For the rest of us, however, the government's uncontrolled (right word?) use of the printing press, which you have often warned against, makes you a prophet of doom.
Your analysis describes exactly how my wife and I benefited during the high-inflation, high interest rate environment in the early 1980’s. We got our house at a relatively low price in 1983 with a mortgage at 12-3/4 % rate. The low price was because of various factors, one of which was high interest rates. Within 8-10 years, we’d refinanced the rate down to 8-1/4 % for 15 years. (Unlike a high purchase price, which can’t be renegotiated, the high interest rate can be lowered through refinancing.) So in 2007, we paid off the mortgage and have lived practically cost-free since then. Of course, utilities, maintenance and insurance costs continue.
Larry is certainly correct when he reminds readers that mortgage rates are currently negative after inflation and home prices have historically kept up with inflation over the long-run. These conditions, all else equal, may make buying and maintaining a home a good "investment" and hedge against inflation. That said, buying and maintaining a home that is too expensive given your lifetime resources is NOT going to protect you against long-run inflation--it's going to do the opposite! Remember, operating costs for your home, including taxes, insurance and maintenance, will keep pace with or outpace inflation over time. So, yes, with inflation as high as it is today, short-term borrowing costs are certainly favorable. But, when it comes to buying a home, the most important thing is not interest rates but rather knowing what is affordable and not overextending. Here's more on the subject: https://lyonfp.com/blog/how-much-house-can-you-afford
Larry, Your last paragraph ("The government is, in short, broke and resorting to the printing press rather than politically painful fiscal discipline. That portends more inflation, against which a home provides excellent protection.") is a mix of hope and despair. For those who own their homes or can afford to buy, there is hope that home ownership can provide the protection you describe. For the rest of us, however, the government's uncontrolled (right word?) use of the printing press, which you have often warned against, makes you a prophet of doom.