Inflation is going crazy and it’s affecting the real estate market.

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In December 2021, the consumer price index came in at 7%. However, it may be as high as 10%. It hasn't been that high since 1982. Inflation is the loss of purchasing power of a currency and is usually the result of a government continuously printing larger and larger quantities of bills. Since 1973, the US dollar has been a fiat currency, meaning it’s not backed by gold or any hard assets. Nearly all currencies now are fiat currencies.

 

What does this have to do with real estate? All markets go up and down, but this market looks very different through the lens of inflation. For example, if your home appreciated 18% last year, it might only be a true 8% net increase in value because the dollar keeps losing value.

 

Some of my clients are taking advantage of low interest rates to buy more hard assets because they expect those assets to grow faster than the 4% mortgage. Conversely, I have other clients who find that now is a great time to cash in on their investments. 

 

If you have any questions, don’t hesitate to reach out to me. I look forward to hearing from you.