Why Skyrocketing Inflation Will Wreck The Real Estate Market (& What To Do About It Today)

        

There's a "four alarm fire" happening in the real estate industry today:

What is it?

Interest rates.

Interest rates are rising extremely rapidly. Now we knew coming into 2022 rates were gonna rise. The anticipation was from Mortgage Bankers Association, NAR, Fannie Mae and Freddie Mac, etc. The consensus was 3.7% by the end of 2022.

But what has happened?

First week in January, rates went to 3.12%. Second week in January, rates went to 3.45%.

Wow — that's almost a vertical rise!

So what's the messaging here?

The messaging for our buyers and sellers is get off the fence and get into the market.

Now, why are rates rising so quickly?

Well, we know that the Fed had told us already that they were gonna raise rates three times in 2022 to fight inflation because inflation's at a 50-year high and 7% was the latest number.

So their #1 goal was to fight inflation.

They also announced they were gonna stop buying mortgage-backed securities...

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The “REI” Secret to Beating Inflation

      

Lawrence Yun was recently quoted as saying, "If you are under the age of 40, you have never seen inflation this high in this country."

The inflation rate in November hit a record 6.8%. That's the highest we've seen in decades.

So when we look at these numbers and everybody's talking about inflation, how does this relate to estate?

It's an interesting conversation. It's something that we should talk about with our clients.

Here's the good news when it comes to real estate:

Real estate is a tremendous asset and a hedge against inflation. That's why last year, we saw a record number of people investing in real estate. In fact, it was the the highest recorded ever. The percentage of homes purchased was 18.2% were sold to investors.

One reason is they're using it as a hedge against inflation.

So here's what's happened according to Lawrence Yun. He says that real estate has proven to be a good hedge against inflation. Some examples:

In the 1970s,...

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How to Leverage Rapidly Rising Inflation to Become Filthy, Stinkin’ Rich

        

Hey guys, a recent report shows that inflation is rising rapidly. It's the highest it's been in 13 years — up to 5.4% right now. When we look at that number, we should look at it from the perspective of: How does that impact us as REALTORS and our clients?

As REALTORS, the one thing we should be concerned with is if we took $100k and we put it in the bank and waited a year, based on this inflation rate, then at the end of the year, our $100k would only buy $94,400 in goods. So that's not a good thing. We need to make sure that we're investing in assets that are rising faster than inflation.

And we need to encourage our clients to do the same thing.

One of the best hedges against inflation is real estate. Which is good news for us.

We need to be talking about this with all of our clients that real estate is one of the best hedges against an inflationary market.

One of those reasons for that is that we can look at appreciation...

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How to Leverage High Inflation to Become a Millionaire Through Real Estate

        

What's one thing we all need to be concerned about?

Inflation.

We're starting to see inflation rise across many spectrums of the economy. And it is a little bit unnerving when we look at it. Inflation has actually crossed the 2% threshold it's actually past 4% right now.

It's different every month, but it's rising fast across all kinds of asset classes and employment. We're starting to see that real, serious pressure on wages. And a lot of wages have driven up.

We now have more job openings in our country than we've ever had recorded before. Think about what I just said: Job openings are wide open.

This idea that we have an unemployment rate is almost ridiculous because every American -- based on the amount of openings right now -- could be employed. They're choosing not to be employed in some areas or they're choosing not to go to work because of wages or whatever. But in a lot of areas, there's not just enough jobs, there's too...

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