Real Estate and Inflation

Are you daily discouraged by the news cycle? Does inflation scare you? Are you presently struggling in America’s inflationary economy?  

Real estate prices increase at or beyond the pace of inflation (depending upon your local market). Many people use real estate to hedge against or cushion inflation’s effects. Inflation affects everyone in the economy, just not in the same way.

Our present inflationary economy started with the COVID pandemic. Many Americans are struggling in the current market because they don’t have enough money for the increased cost of goods. However, real estate is a safe landing pad for people who are economically drifting and uncertain about where they will land.

A SAFE PLACE TO LAND AMID SKYROCKETING INFLATION

Americans are facing inflation, the war in Ukraine, and shutdowns in China, making supply chain shortages horrific. 

Everything is doom and gloom in the news cycles. In reality, many Americans are suffering, and every American is affected by inflation. 

Prices at the gas pump, grocery stores, housing, and every other necessary expense has skyrocketed as evidence of inflation.

Yet, intelligent investors find a way to prosper regardless of market conditions and the daily news cycle. 

What do they do? How do they do it? Let’s peek inside the mind of one of America’s most savvy real estate investors.

WHAT IS INFLATION AND HOW DOES IT AFFECT REAL ESTATE?

America has not experienced an inflationary economy in over 40 years; most adults today haven’t a clue. Inflation is an unexpected rise in prices that are not comparable to wage increases. 

Usually, this is no big deal, but in America’s case, the price rise is sharp and steep. It is happening quite suddenly.

Inflation is a price rise brought on by too many dollars afloat in the economy. These dollars attempt to find goods and services due to consumer wants and needs. 

The COVID pandemic has a lot to do with our present inflationary economy. 

Historically, mortgage rates had been meager. But, when the US government printed trillions of dollars to use as a “stimulus” for the economy, the currency supply surpassed the goods available.

United States. manufacturers reduced production because many Americans were at home and did not need many products and services they had historically purchased. When the economy reopened, mass shortages ensued.   

Many Americans are struggling in the present market because they do not have enough money to cover the high cost of goods and services.

They have increased beyond what most people money can buy or what others are willing to spend. 

Inflation is unquestionably a significant concern for many Americans, but not for all.

When the currency supply increases quickly, it also increases real estate prices.  

REAL ESTATE AND INFLATION: THE NATURE OF THEIR RELATIONSHIP

The knowledgeable and savvy real estate investor is not frightened by an inflationary economy. 

Inflation is actually a delight for real estate investors. 

Inflation drives an increase in the prices of real estate – this is the case for all types of real estate:

  • Single-family homes
  • Multi Family homes
  • Commercial properties
  • New construction
  • Rents
  • Property appreciation and rent hikes are especially beneficial for savvy real estate investors. 

    These investors get to enjoy property purchased at pre-inflationary costs that appreciate dramatically due to inflation. 

    Rising real estate prices are a significant factor and primary benefit of investing in real estate. 

    Specifically, real estate prices increase at or beyond the pace of inflation (depending upon your local market). 

    Many people use real estate to hedge against or cushion the effects of inflation. When inflation happens, the purchasing power of each dollar decreases.

    For example, to fill up a car may have cost $40 in January 2022, but is now near $75. That’s inflation: same car, same gas station, but a significantly higher price.  

    Real estate investors, who are always looking for ways to grow their wealth, find that inflation is not a severe problem for them but an opportunity. 

    Real estate investors invest their money in hard assets necessary for life: houses, apartment complexes, commercial property, and the like. 

    Asset appreciation preserves their purchasing power, even in an inflationary economy. It’s a hedge of protection and opportunity that real estate offers a savvy investor.

    HOW IS INFLATION AFFECTING YOU?

    Are you daily discouraged by the news cycle? Does inflation scare you? Are you presently struggling in America’s inflationary economy? 

    There is no need to fear. Rise to the occasion and seize the moment. Watch as Glenn Schworm teaches real estate investors how to thrive in real estate amid inflation.