[quote=joestool]
Buying a house as a hedge against inflation incorrectly correlates money supply inflation with house price inflation. They are not the same.
It also assumes, if you take on mortgage debt to buy said house, you benefit by paying back the debt in devalued dollars. This is only true insofar as your ability to pay the debt remains constant in real terms.
In other words, if your salary, or pool of perspective buyer’s salaries don’t go up commensurately when it takes $30 FRN’s to buy a cheeseburger — and gas, food, electricity, water, etc. all costing more FRN’s — there’s even less FRN’s left over to pay that “devalued” mortgage.
Good luck with that plan.
Yeah, first thing I’m going to do when the value of all salary and savings are wiped out is go out and buy me a big-ass house.
If you actually believe your ill-liquid, non-portable, non-fungible, stucco crapbox with a high cost of carry (maintenance, insurance, mortgage, taxes, fees, etc.) with a big tax target bullseye painted on its side is a store of real value inversely to a currency devaluation — you really need to get over yourself and your delusional “home value”.[/quote]
Lets see, how much was an engineer getting paid in 1970? How much was gas, food, electricity, water, etc. in 1970? How much was a house in 1970? Now please tell, after 40 years of inflation, can a person living on welfare pay for house if it was priced at 1970 price?
Example, http://www.sdlookup.com/Property-3E22B7B0-474_Santa_Dominga_Solana_Beach_CA_92075
They’re paying $929 in property tax a year. It was built in 1971, so I assume they bought it new. Their assessed value is about $85k. Given 2% increase in assessed value due to prop 13, they probably bought it for ~40k. Even a McDonald employee today making minimum wage can afford a mortgage payment of $40k house.
