[quote=chrisp]Again point taken. What is everyone’s thought on inflation though? Is that an additional incentive to get in now?[/quote]
If there was any reason to buy a house right now, this would be the #1 reason.
Here’s where I become very cynical… The PTB (govt, banks and other financial institutions) are trying desperately to convince us that inflation is around the corner. We are hearing it from every corner of the nation, along with the horse-pucky about “green shoots.” When everyone is trying to convince the masses in such a forceful and particular way, I get uncomfortable and start looking for other answers.
If they were truly fearful of inflation, we wouldn’t have the $8,000/$15,000 home-buying incentives from the federal govt, and $10,000 incentives for new houses coming from a BROKE Californian govt.
If inflation were upon us, we would not be seeing a 0-.25% FFR. If we had inflation, we would not be seeing Treasuries (espcially long-term), municipal bonds (especially as so many are broke!), and corporate bonds at such low rates.
If inflation was the biggest risk, the Fed would not be threatening to buy mortgage debt and Treasuries at every turn.
If inflation were upon us, people would be asking for raises, not begging to have reduced hours so they won’t have to be laid-off.
The only concern I have WRT “inflation” is a currency event of some sort. You can certainly look at housing as a hedge — if foreign buyers come here with their strong currencies and essentially buy America from us. But if our currency collapses, other rather drastic things will be going on in our country as well. Prices on imports will scream skyward, leaving less money for people to allocate toward housing costs.
Personally, I’m trying to hedge against a USD collapse by holding a basket of other currencies and foreign sovereign bonds. Not investment advice, and certainly not guaranteed to work out, but these are much more liquid than housing, and have much lower transactions costs.
Still, if you want to look at housing as a hedge against inflation, it would still be wise to be as conservative as possible, and not put all your eggs in one basket. If you were looking at a $200K house (SFH) in an area that has already seen 50% declines, and had 20%+ down, I can assure you that you would have gotten a different response. I apologize if this thread seemed too confrontational. It’s just that some of us are really on edge because of what we are seeing out there.
