Yeah I know you have taken a beating on this site but I admire you for hanging in there. I did note that your post did not call for a bottom or anything of the sorts. I guess we all have our own bias when we read peoples posts. I find that my posts never seem to correctly display my intent many times as well.
One thing that concerns me about the inflation hedge, is that there are many things that tie into it. Right now as long as real estate depreciates faster then inflation then I am okay. While I am slowly watching the value of my lump of cash go down (and it sucks) the intent of that lump is to buy real estate. Thus the asset for which the lump will be exchanged for is still depreciating faster then the lump itself. Thus I am okay with the lump being the lump and the asset to keep depreciating. However we do NOT need hyper inflation to swing things the other way, all we need is the depreciation of the asset to run slower then the depreciation of the lump of cash.
Furthermore what is also not discussed at all, is the widening of the gulf between the have and have nots. If we do run into an inflationary spiral, I very much believe we will see a situation of the rich getting a HELL of alot richer by scooping up real estate with cash or very high equity stakes. Will real estate valuations fall? Of course… however will real estate be affordable and will the valuations scale with the interest rate hikes? Hard to say. I do not think it is a slam dunk to say that real estate depreciation will be commensurate or even exceed the change in monthly payment needed to overcome substantial rate hikes. It becomes very iffy and again will have severe variances by areas. The problem becomes much more unpredictable, especially when those with large reserves start to get involved.
