All things being equal (i.e. no bubble, no crash, but a normal RE market . . . ha! since when???) owning RE is a hedge against inflation. Theoretically as inflation rises it influences the price of the RE (upward) separately and distinctly from additional influences such as supply and demand. In addition, if the home is financed the “carrying cost” (a tern thrown around a lot here) also declines as inflation increases (assuming of course inflation causes your income to increase).
If (big IF in some cases) the carrying cost (interest rate) is fixed (30yr fixed loan) while inflation rises, the releative carrying cost goes down. All of this of course makes many assumptions (normal RE market) that are totally absent from the So Cal RE reality . . . .
No evasion here its just that the “inflation hedge factor” is almost totally overwhelmed by other more significant factors affecting RE prices (bubble burst, 4closure, high inventory, etc.).
