Are you still a tenant? If so, ask yourself why. Is it because you want to be as flexible as possible and not be indebted to a mortgage? Is it because you want to be able to move in a short period of time without having to sell anything? Have you invested the difference between your current rent and a mortgage and all the expenses inherent in the property in another asset to increase your wealth or is it in cash (which is really a “junk” according to Ray Dalio, founder / CEO of Bridgewater Associates hedge fund, diminishing your wealth daily)?

The real value of cash or what is called our “fiat currency” has been reduced with the drastic increase in our current inflation and the unfortunate and utter necessity and non-transparency of the Fed. When you add the price of energy and food to the equation, your true inflation figure would be more accurate. If the truth were to be told (which it currently is not) it would send shockwaves throughout our economy and purchases would be drastically reduced (and hoarding could take place as it did with a simple toilet paper product in 2020).

A different psychology and fear would occur and also play a role in reducing expenses. As inflation continues, the value of your dollar and your purchasing power declines, as it does now, so the dollar you have in cash now in 2021 will be worth much less in 2022, more than 15%.

Everything is looking very rosy in the current housing market as spending increases, mostly because sales slowed and stalled for part of 2020, but money flowed from the Fed to much of the population and people were paid not to work. Most didn’t have to pay rent and still don’t (although some could more than afford it), so everyone saved a lot of money. Now so many people are spending it and with the supply chain disruption, limited supply and high demand, the prices have also increased; but luckily people are still spending for now.

My professional opinion on inflation is that it won’t come down until the supply chain gets straightened out (more dockers and truckers need to come back into the market to do their jobs) and demand for products and durable goods will not be reduced as dollars spread out and shift to hospitality, vacations, air travel and other services. Somewhere in the future, perhaps towards the end of 2022 until 2023, inflation could slow down.

But the continued printing of money (over $10 trillion) and the Fed buying bonds (because no one else is doing it) will continue to further dilute our currency and its power. of purchase. Interest rates, being as low as they are, have been a boon for homeowners, investors and businesses as a short-term band-aid solution (not a permanent fix), but extremely bad for the economy. future of our economy.

As inflation continues, and when and if interest rates rise, the cost of building homes will absolutely rise as it does now (due to supply chain issues) , even with our historically low rates. Demand will cool as the cost of ownership rises beyond “ordinary buyer” budgets, which in turn will continue to slow builders and in some cases stop building homes , which will stop adding stocks. However, as more sellers enter the market to try and sell, and as we eventually arrive at the “normal market inventory” of six to seven months and beyond, prices will normalize and may decline. .

As families and people need to live somewhere, rental prices will increase due to fewer people buying and more entries; the basic economics of supply and demand. However, expensive states like NY, CT, NJ, CA and others will continue to see population exodus (although those who can afford to continue living there will remain) but will add to other states , for example NC, SC, Fla, Tx and other states where the cost of living is significantly lower and rentals will be more advantageous not only for renters but also for investors and owners.

How will property taxes and representation be handled in states that continue to lose their families? As these expensive states continually increase the cost of living, it will only add insult to injury, further reducing the number of people who can no longer afford or want to live for their mortgages, real estate , their national and local taxes. In addition, another variable, global warming, will affect and add to the diversity of places to live. Could there be a reverse flow away from the states most affected by rising temperatures?

There are far too many variables in the mix to even guess with certainty where we are going, but the word “pain” must be considered part of the equation, in order to get things back to Earth, or maybe not not; and then we’ll look back and say we could have, should have, but we didn’t!

Philip A. Raices is the owner/broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40 years of experience in the real estate industry and is a Realtor Institute Graduate (GRI) and Certified International Real Estate Specialist (CIPS). For a “FREE” 15-minute consultation, an analysis of your home’s value, or to answer any questions or concerns you may have, he can be reached by cell: (516) 647-4289 or by email: [email protected] Com