Inflation and the Consequences

Inflation and the Consequences

Typically in an inflating economy the price of real estate increases along with everything else. Today we have a situation where the cost of housing is actually the factor that is holding down inflation. Rents, both commercial and residential, are going down. The prices of everything else except maybe durable goods are going up. No-one is buying durable goods anyway. Landlord’s expenses are rising. Rents are falling.

My old friend Freddy Stephens always said real estate prices were like a ski rope. The boat goes around a curve and the line gets slack. When the boat straightens up the rope tightens up and progress continues. For the years 2003-2006 we were skiing on the outside of the curve, going much faster than the boat. Now we are on the inside and sinking fast. I just hope the boat is not out of gas.

Real estate investors are generally befriended by inflation. The value of the properties goes up. The relative value of the debt goes down. If someone will get the boat started and tighten up this ski rope before we drown this may still happen.

David Segrest is a REALTOR® in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com He is also a contributor on Argentina to: http://realestatebloginternational.com/