- This topic has 28 replies, 8 voices, and was last updated 17 years, 6 months ago by
Wiley.
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May 24, 2007 at 9:31 AM #9154May 24, 2007 at 9:37 AM #54706
(former)FormerSanDiegan
ParticipantIf you do not buy a house and you have all your assets in stocks, bonds or cash aren’t you vulnerable in case inflation comes back like the 1970s ?
Yes.
If someone buys a home and manages to retain a job with income adjusted for inflation during your inflationary spiral wouldn’t the real amount of the home loan decline ?
Yes.
Straight enough ?
May 24, 2007 at 9:37 AM #54721ParticipantIf you do not buy a house and you have all your assets in stocks, bonds or cash aren’t you vulnerable in case inflation comes back like the 1970s ?
Yes.
If someone buys a home and manages to retain a job with income adjusted for inflation during your inflationary spiral wouldn’t the real amount of the home loan decline ?
Yes.
Straight enough ?
May 24, 2007 at 9:37 AM #54708no_such_reality
ParticipantYes.
If you bought a million dollar home today and 20% annual inflation returns for 3-4 years, you’ll be sitting pretty, provided you can make the payments in the mean time.
May 24, 2007 at 9:37 AM #54723ParticipantYes.
If you bought a million dollar home today and 20% annual inflation returns for 3-4 years, you’ll be sitting pretty, provided you can make the payments in the mean time.
May 24, 2007 at 9:37 AM #54710Bugs
ParticipantDo you seriously believe that incomes will even come close to keeping up with inflation?
May 24, 2007 at 9:37 AM #54725ParticipantDo you seriously believe that incomes will even come close to keeping up with inflation?
May 24, 2007 at 9:44 AM #54729bob007
ParticipantIt is going to depend upon profession and yourself
Whether someone has a job during a inflationary spiral
Whether incomes keep up during the inflationary spiral
May 24, 2007 at 9:44 AM #54714ParticipantIt is going to depend upon profession and yourself
Whether someone has a job during a inflationary spiral
Whether incomes keep up during the inflationary spiral
May 24, 2007 at 9:44 AM #54716ParticipantDo you seriously believe that incomes will even come close to keeping up with inflation?
Aha ! That’s one of the big IFs in his question.
I don’t incomes kept up in the 70’s.
For the past decade, incomes have actually exceeded official inflation statistics. In periods of high inflation they tend to fall behind.May 24, 2007 at 9:44 AM #54731ParticipantDo you seriously believe that incomes will even come close to keeping up with inflation?
Aha ! That’s one of the big IFs in his question.
I don’t incomes kept up in the 70’s.
For the past decade, incomes have actually exceeded official inflation statistics. In periods of high inflation they tend to fall behind.May 24, 2007 at 9:45 AM #54718ParticipantI doubt my income would keep up with inflation
May 24, 2007 at 9:45 AM #54733ParticipantI doubt my income would keep up with inflation
May 24, 2007 at 9:46 AM #54720schizo2buyORnot
ParticipantAll 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.).
In search of a crystal ball . . . .
May 24, 2007 at 9:46 AM #54735ParticipantAll 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.).
In search of a crystal ball . . . .
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