Buying a house now could be the best hedge against inflation …EVER!

By
Real Estate Broker/Owner with Richard Weisser Realty

 

Buying a home in 2010 is a hedge against inflation.Most economists agree that recent rashes of government spending will ultimately lead to significant inflation. The constant infusion of cash that is intended as a short-term solution will eventually have a long-term effect on the value of a dollar.

One of the best hedges against this expected phenomenon is the purchase of a home during one of the best buyer’s markets in history. With low, low property prices and record low fixed interest rates, there has never been a better time to buy a home.

But if one takes into consideration the fact that a mortgage may be repaid with inflated dollars, the deal only gets better and better. By fixing housing expenses now in terms of the 2010 dollar of today, home buyers will be immune from contrary inflationary economic forces for as long as they own their property.

It’s a tremendous way to protect wealth and to meet your housing needs for decades to come.

 

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Re-Blogged 17 times:

Re-Blogged By Re-Blogged At
  1. Lisa Stafford 07/26/2010 01:22 AM
  2. Bill Travis 07/26/2010 02:19 AM
  3. Marilyn Boudreaux 07/26/2010 04:47 AM
  4. Mike Russell 07/26/2010 04:55 AM
  5. Paige Walker 07/26/2010 10:28 AM
  6. Shanna Hall 07/26/2010 05:35 PM
  7. Carla Muss-Jacobs, RETIRED 07/26/2010 06:31 PM
  8. Todd & Devona Garrigus 07/26/2010 06:48 PM
  9. Jim Hale 07/26/2010 07:41 PM
  10. Michael Lissack 07/27/2010 12:42 AM
  11. Tom Branch 07/27/2010 12:57 AM
  12. Gabe Sanders 07/27/2010 01:27 AM
  13. Buki Burke 07/27/2010 02:53 AM
  14. Lottie Kendall 07/27/2010 03:15 AM
  15. June Piper-Brandon 07/27/2010 03:50 AM
  16. Patricia Aulson 07/27/2010 04:11 AM
  17. Adam F 07/27/2010 08:27 AM
  18. Linda Graves Arnold 08/08/2010 03:18 AM
Topic:
Home Buying
Location:
Georgia Coweta County Newnan
Groups:
Realtors®
The Lounge at Active Rain
"Whacked"!!!
Club Chaos
Diary of a Realtor
Tags:
housing prices
inflation

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Rainer
304,731
Linda Metallo DiBenardo
RE/MAX Impact, Lockport, Illinois - Lockport, IL

And how about the available inventory of homes?  Today's buyer has so many choices!

Jul 27, 2010 01:25 AM #39
Ambassador
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Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Richard, I think a lot of people are finally coming to this realization.  With prices so low and other conditions being right, we see many investors coming back to the market.

Jul 27, 2010 01:31 AM #40
Rainmaker
1,414,061
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor, Representing Buyers and Sellers

You nailed it, Richard. Even though there's talk that home prices could drop a little further, I'm not hearing anyone say interest rates will also continue to fall. So now's the time to buy your dream home at a greatly reduced price and at an interest rate you'll brag about in the near future.

Jul 27, 2010 01:50 AM #41
Rainer
42,737
Keith Sellers
Sellers Real Estate - Kalamazoo, MI
Greater Kalamazoo and Lakeshore

In other locations of the world you commonly have "generational" loans.  Wouldn't it be ugly if folks all of a sudden had to start taking out 50 and 100 year mortgages?

But the reality is that so many more  millions of folks will not be able to endure the inflation as in times past.  They will have some really hard decisions to make. And with a gov't that thinks solutions to problems include greater borrowing and redistributing wealth, they obviously will have a "plan" to help those in need for such a ripe opportunity to enlarge the bureaucracy.

Its shaping up to be a redefining time in the history of our nation and the world, when freedom loving people of sound economic principles reject the authority's bubble & burst, borrow-your-way-to-slavery economic model, and restore sanity to our nation's economy with the constitutional republic we were handed from our fathers.  They warned against the villany we daily face every day in the form of this debt-strapping, materialism vomiting monster known as fractal reserve banking (i.e. legalized stealing).  

Inflation is legalized stealing, because a small group of wealthy individuals control the levers to the value of money by controlling its supply.  Remember that verse where Jesus says "don't lay up treasure on earth, where thieves break in and steal."  Say Grandpa worked hard all his life, and saved a fortune of 100,000 (in his day).  But because of the banksters, his hard earned fortune sitting in savings is stolen from every day thru the magic of inflation.  No need to rob Grandpa, the banksters have already legalized stealing without every touching his stash!

Maybe you realize the Federal Reserve is not working for the people, it is a consortium of private banking interests, and its only obligation -- to improve its own bottom line.  But if you don't, its time to wake up and smell the foul odor, and get a on your muck boots, and start mucking out 2 party clown candidates working for big slick and not freedom. 

Maybe you seem to be sitting pretty for a crisis, but what about your country, your neighbor? 

Jul 27, 2010 01:50 AM #42
Rainmaker
559,620
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

I agree but you also have to be careful about your income to service the debt and to maintain the house and pay the taxes.  Wages are usually the last item to go up in a hyperinflation scenario.  I would think that you need something like silver or gold on the side in order to make sure that you have something else that goes up in value so that you can pay the mortgage and other expenses even if you don't have a job or you income doesn't go up as fast.

Jul 27, 2010 02:42 AM #43
Rainer
40,746
Buki Burke
Ventura, California - Ventura, CA
(805)377-0236, Berkshire Hathaway Home Services CA

You've definitely hit a chord. It's interesting how difficult it is to buy low and sell high. Now that there is the perfect evironment for buying, with lower prices and historically low interest rates, there are still people waiting in the sidelines. When prices were going up to the stratosphere, you couldn't convince people that it was a great time to sell. There is a lot to following the crowd. I too believe that owning a home is a great hedge for inflation--a comforting one as long as one can afford it.

Jul 27, 2010 02:50 AM #44
Rainer
33,424
Mark Smith
Cherry Creek Properties, LLC - Erie, CO

I preach this everyday. I think this is a great post- people are so concerned about will the home drop $ 10,000 INSTEAD of  WOW I have a 4.5% rate and that's going to look great when rates are over 6.5% in a couple of years.

Jul 27, 2010 03:05 AM #45
Rainmaker
722,238
Robert Hammerstein
Keller Williams Valley Realty - Hillsdale, NJ
Bergen County NJ Real Estate

Richard - Truer words were never spoken or posted.... We've always touted this advice and I couldn't agree more... Buy now.. It's a great time to invest in Real Estate

Jul 27, 2010 03:09 AM #46
Rainmaker
1,707,567
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Thanks, Richard, for stating this so clearly and concisely. Re-blogged!

Jul 27, 2010 03:24 AM #47
Rainmaker
985,413
June Piper-Brandon
The Traczyk Team at Remax New Beginnings - Baltimore, MD
Piecing Dreams One Home at a Time

Richard, our neighbors to the north have been experiencing inflation as their economy breaks free from the doldrums.  There is no reason to believe that our economy will soon follow suit and real estate is and has always been a great hedge against inflation.

Jul 27, 2010 03:49 AM #48
Rainmaker
186,851
Steve Baklaich
RE/MAX Results St Cloud Mn real estate - Saint Cloud, MN
Treating Buyers & Sellers to Full Service Always.

I really like the point about the repay.I had a similar conversation only from a slightly different direction yesterday with a person calling about our rental. In a nut shell, with all of the homeowners who have lost their homes coming into the rental market we now have a vacancy rate that is almost nonexistent, we were pretty low before at 3% generally, but place an ad now and get flooded with calls, simple supply and demand - low availability will mean higher rents and soon. 

Jul 27, 2010 03:57 AM #49
Rainmaker
661,949
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Great post Richard,  now is the time for sure.  Real Estate has always been the one true worthwhile investment.

Thanks for the good read.

Patricia

Jul 27, 2010 04:11 AM #50
Rainmaker
661,949
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

I really enjoyed the topic of the post today Richard.  I've re-blogged it.

THanks,

Patricia

Jul 27, 2010 04:15 AM #51
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Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I've been preaching this to my investors for years! If you buy four rental properties now, your rent increases as inflation rises, but your mortgage payment won't!

Jul 27, 2010 06:54 AM #52
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Richard, we keep "hearing" of the possibility of hyperinflation in the years out, but most I talk to still think the government has it all backwards, that with the lack of new jobs, DEFLATION is the thing to worry about. With all the home prices around me plummeting in value with lack of buyers I think deflation is the bigger thing to worry about. Maybe it is only my local economy but that is what I see.

Jul 27, 2010 07:59 AM #53
Rainer
152,258
Anna Tolstoy
Coldwell Banker Residential Brokerage - Natick, MA

Excellent point, Richard! Yet some buyers seem to be waiting for "better deals", and honestly, I'm not sure what they mean by that....

Jul 27, 2010 09:26 AM #54
Rainmaker
516,433
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX
Broker,CLHMS,GRI

Richard, I left a previous comment but learned today that the $$$ banks are sitting on is now in excess of two trillion dollars and they are earning virtually nothing from it soooooo...it could mean that more money will finally start flowing to consumers who want to buy!

Jul 27, 2010 10:22 AM #55
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Richard - Lots of good points here.  I love the idea with paying back with inflated dollars.

Jul 27, 2010 12:49 PM #56
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Rene Fabre
First American Title - Seattle, WA
Marketing in the Digital Age

Right Spot On... chiming in with Todd at #52... Everything takes time, and time flies... but your cost for a loan stays the same. Well said.

Jul 27, 2010 03:42 PM #57
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890,680
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Devil's Advocate for a moment here... 

The Fed has been keeping interest rates extrememly low for a long time.  There are two reasons this worries me...  The first is that if rates rise before the economy is really steaming, it could push real estate prices lower again. 

Second, with rates at almost zero, there isn't significant inflation... that tells me that there might be a danger of deflation.  Paying the loan back with deflated dollars would just not be fun.  Of course, the government doesn't want to pay back its loans with deflated dollars, either... 

Just sayin'

I'm not sold on the direction money value is going to go.

Jul 27, 2010 04:00 PM #58
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