At a workshop recently, during our discussions of today's low interest rates and the likelihood that they won't be with us too much longer, we have also discussed the strong possibility of inflation visiting us soon. Today's low interest rates are the result of the Federal Reserve printing more money, and putting it into circulation - in this case to purchase 10-year treasuries and mortgage-backed securities.
However adding more money to the system reduces the value of the dollars already in the system. It is a simple act of dilution. Inflation is one result of the dollar losing its value. This article addresses that probability.
It is easy to understand how a weaker dollar makes purchases of products from abroad more expensive. And since we import so much, that creates an inflationary atmosphere by itself. However, a weaker dollar also has a negative effect on purchases within the US. As the dollar gets weaker, it takes more of them to buy goods and services. That is inflation. Items cost more dollars than they used to.
In real estate, inflation tends to push housing and land prices higher. So for us, as real estate agents, this is not necessarily bad - initially. When home prices climb buyers want to jump in, usually heating up the market. That's good. However, this same dynamic will also cause interest rates to increase. That is not so good.
The writing on the wall says take advantage of today's low interest rates for two reasons. 1. They are going to disappear. 2. Prices of homes will likely begin to increase as inflation takes hold. This is a two-way loss for you buyers - spending more for the same home in both purchase price and increased monthly payments. Don't wait. We are in the sweet-spot for buyers right now.
Land and real estate are a hedge against inflation!
Buy land and wait, don't wait to buy land.
Enjoy, and have a great weekend,
Ricardo Pomar
CEO of Camino Real Land Corporation
Developers of Sunsites and Sunsites Ranches
www.sunsiteslandrush.com
However adding more money to the system reduces the value of the dollars already in the system. It is a simple act of dilution. Inflation is one result of the dollar losing its value. This article addresses that probability.
It is easy to understand how a weaker dollar makes purchases of products from abroad more expensive. And since we import so much, that creates an inflationary atmosphere by itself. However, a weaker dollar also has a negative effect on purchases within the US. As the dollar gets weaker, it takes more of them to buy goods and services. That is inflation. Items cost more dollars than they used to.
In real estate, inflation tends to push housing and land prices higher. So for us, as real estate agents, this is not necessarily bad - initially. When home prices climb buyers want to jump in, usually heating up the market. That's good. However, this same dynamic will also cause interest rates to increase. That is not so good.
The writing on the wall says take advantage of today's low interest rates for two reasons. 1. They are going to disappear. 2. Prices of homes will likely begin to increase as inflation takes hold. This is a two-way loss for you buyers - spending more for the same home in both purchase price and increased monthly payments. Don't wait. We are in the sweet-spot for buyers right now.
Land and real estate are a hedge against inflation!
Buy land and wait, don't wait to buy land.
Enjoy, and have a great weekend,
Ricardo Pomar
CEO of Camino Real Land Corporation
Developers of Sunsites and Sunsites Ranches
www.sunsiteslandrush.com
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