VERY INTERESTING... Lions and Friends. Have A Look At This. From Greg M
Is Real Estate a Hedge Against Inflation? INFLATION NATION - 2021 INFLATION IS HERE
I have stated publicly that I am not generally a “real estate” guy, although I do own real estate as an asset.
I came across this video, it just happens to be from someone I know personally- and by the way and he is a straight shooter. HE IS A REAL ESTATE GUY.
Watch this video, and let me know what you think in the comments.
I think that he is spot on for most of the video, especially concerning debt depreciation and rent increases. Also I agree that disregarding every other variable, housing will maintain pace with inflation for the most part (the house itself will depreciate though, so there is some math to do there). But as he said, historically it has kept pace.
As is the case with the vast majority of historical analysis, most of it does not include the environment we are heading into I think, with the way that the dollar will fall and the societal changes that may occur along with that. So while I cannot disagree that housing HAS BEEN a good hedge against inflation, I am not sure that it will continue to be a good hedge. And especially considering how illiquid housing is, I am much more inclined to be careful with how much real estate I own. I like diversification, as what I am going to put forward is not a guarantee, however I see it as the likely scenario.
I think that the population is going to be severely reduced over the next decade or so, could be shorter or could be longer. So while inflation might be pushing up at record levels, if people simply do not need housing because there aren't as many people to live in the already constructed houses, I could see real estate falling across the US and probably the world.
One other thing to consider would be the geographical area, as was sort of said but not expanded on in the video. Just like the rust belt lost factories, as people get more desperate and angry, I think there will be a lot more civil unrest, which could definitely impact properties in the suburbs of cities and in cities themselves. More rural areas should be fine.
Just my two cents. My parents have done real estate their entire lives and it has been very good to them and I studied economics (the shitty kind they teach at liberal arts universities, but hey, I can still crunch some numbers lol). I know how good rents can be and appreciation of property, however right now I don't see real estate as a great prospect.
I'm glad that I do not eat at Denny's. lol