Wednesday, March 28, 2012

Inflation Doesn't Necessarily Make Real Estate a Good Idea...

We all know that inflation is good for gold, silver and commodities in general. But what most people don't realize is that an inflationary environment does not necessarily make real estate a good investment (but don't tell this to Ben Bernanke!).
"Inflation—and hyperinflation—affects two things immediately: Near-term necessities (such as food and fuel), and credit.

The effects on basic necessities is obvious—but the effects on credit are more subtle and complex.

How does inflation and hyperinflation affect credit? By driving up interest rates—obviously. But what is the effects of rising interest rates in an inflationary/hyperinflationary environment?

Real estate prices collapse."

I urge everyone to read this blog below. And remember that PRICE is nothing... and VALUE is everything. We could very well see real estate prices go up a little bit in the coming years, but in no way does this mean that real estate will be a good investment. Sure, your home could go up in price from $250K to $300K, but what does that matter if gasoline is $6, food prices and health care costs much higher, gold at $5,000, etc? Some things may go up in price - but nothing will go up in value more than gold and silver in my opinion. There will be much better buying opportunities in real estate, but that time is not now.

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