If interest rates don't rise, then sure - inflation is likely to show up in higher housing costs, which means you'll deflate away that loan and your asset will

If interest rates don't rise, then sure - inflation is likely to show up in higher housing costs, which means you'll deflate away that loan and your asset will appreciate. If interest rates rise, then you have one or two problems. If your loan isn't at a fixed rate, then you'd better hope you can still afford your mortgage. Say you paid a 20% downpayment on a home worth $375K. A $300K note at 3% is a $1,250 per month expense, but at 8% it's $2,200 a month. People forget, but mortgage rates were 8% as recently as 2000. Even if your rate is fixed, new buyers have affordability problems due to the same phenomenon, which hits valuations. If you can afford $1,250 a month, maybe you can afford $1,500 after some inflation pads out your pay check. But, with rates at 8%, that's only a $200K mortgage, so maybe a $375K home is only a $250K home in the new rate environment and you're in negative equity all of a sudden. If you need to sell, then you're losing the initial downpayment and you may still end up owing the bank. If you can't cover it, say goodbye to your creditworthiness.