Why Is Real Estate Considered a Hedge Against Inflation?

Real estate values and rents tend to rise with inflation, protecting purchasing power. As prices increase, the cost to build or buy new properties rises too, which boosts the value of existing homes. Meanwhile, fixed-rate mortgage payments stay constant, making real estate an effective inflation buffer.

In my experience, real estate performs well in inflationary periods because it’s tied to tangible assets — land and structures that retain intrinsic value. Investors benefit as rental income and property values rise, while debt costs stay the same. That dynamic makes real estate one of the best long-term hedges against inflation.