Walter/Scardey, it’s actually quite simple, what you are doing without realizing it is the best hedge against inflation/devaluation. You are about to enter escrow while rates are around 4%, (for gods sake get a fixed rate) and you are buying property in an area where the prices are at a low or a norm, you are paying half peak and a fair price. You sir, are in the drivers seat on this one. This has happened before, it will happen again. We have had zero inflation for a while so we owe the gods some abnormal inflation, the pendulum will swing, just like it swung back in real estate, things find balance.
In the 1970’s my folks bought a house, a nice place for about 30k, their mort was about $400 (rates were higher then) and rent was about $300. 15 years later, I rented a cruddy apartment in a cheaper area for almost twice what my folks big house cost them, why? Inflation? Renters get hurt during inflationary times, renters have been having a great time for a few years now, rents have been stable, but that will likely change. Wages tend to go up at a slower pace, but they do catch up, the only thing that stays constant is a mortgage. This works for walter but San Diego is still one of the top ten worst places to buy compared to rents. Since the government cant get the prices of houses to rise, they can get the rents to go up and that will get people out from being underwater, it’s like the easy button at staples.
Is it a government conspiracy? Is it just the cycle of things? It doesn’t really matter, it will more than likely happen, having everything in cash is not the correct play if you think it will happen. Stocks benefit too, coomodities have a blast. If you fear something, get insurance for it.
Inflation/devaluation is not a “day trade” it’s an econimic fact and one that should be hedged against. You don’t need canned food and ammo, you just need to be defensive. I have a close friend who has been living in a South American country for about 20 years, they lived through hyperinflation and currency collapse, while owning a business. They made a killing during those times on real estate, their business lost money while their rentals became cash cows overnight. As an example, if I were to buy a 100k condo near my house that rents for 1k a month (something I’ve been exploring, but the prices have risen to 120k and the rent is the same, so I held off), if a 10-1 devaluation were to occur like it did in the country my friend lives in, I would still only owe the bank 100k, but rent would be 10k a month, it would be paid off in a year. I doubt we see anything like that, but if that is what you are afraid off, that is how you make it work for you. Stop seeing clouds scardey, look for the silver lining, it’s always there if you look.
