Inflation

A decrease in the value of money

Inflation is a measure of the increase in the price of goods. Inflation generally affects your buying power - If you buy 10 ice cream cones with $10 one day, and inflation rockets up 10% the next day, you’ll only be able to buy 9 ice cream cones with your $10.

Inflation usually causes interest rates to rise. This is when it pays to have a fixed rate loan, rather than an adjustable rate loan since the interest rate doesn’t increase to match the market rates.

Inflation can also affect property values: if your home is worth$100,000 and inflation goes up 10%, your home is now worth $110,000.

An appraiser, though, usually adjusts their calculations to account for inflation when figuring out the market value of a property. Also, there are many factors that work together to influence property values that may offset inflation, such as supply and demand and a neighborhood’s condition.

Inflation levels in the U.S. are stable and fluctuate between 3% and 6%.