Friday, July 25 - "Does Inflation Affect Home Prices?" Question: In what ways does inflation affect home prices? Answer: Inflation means that the value of cash is being reduced over time, thus it takes more dollars to buy a loaf of bread -- or a house. In practical terms, homeowners can beat inflation with a fixed-rate mortgage. While the interest rate is set, inflation over time means that each month you're paying with less-valuable dollars while the cash value of your home rises. If the cash value of your home rises faster than the rate of inflation, they you've gaining additional spending power and that's both one measure of real wealth and often a very good reason to be a long-term real estate owner.