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Florida Real Estate and Inflation

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									Florida Real Estate and Inflation
A constant motto in my conversations with potential customers is that
inflation is a key factor in Real Estate investment. My personal feelings
have always been that inflation indexes and calculation have historically
been somehow skewed and distorted and that they don't accurately reflect
the reality of our currency devaluation throughout the last two decades.
A quick trip to supermarkets and gas stations and a quick look at your
property taxes, property insurance bills, the price a new home, will
quickly put in doubt the touted 2% or 2,5% annual inflation rates
included in official economic data. All signs are that we are heading
into a period of high inflation, fed by enormous hikes in oil and food
prices.
Real estate is a unique, valuable and tangible asset, which is not always
the case with stock market shares, bonds, and other paper investments.
World's population is constantly growing; the amount of available land
and recourses is not. Unlike a dollar in the bank, its actual value will
not shrink with inflation. Real estate will always be needed for
residence, commercial, farming and industrial use.
My opinion has always been that, if we follow certain criteria and
reasonable principles when acquiring real estate, it will always be, on
the long term, the best investment we've ever made. In Florida, this is
especially true, since we are one of the fastest growing states in the
US, and we are due for a continued migration from of baby boomers from
Northern states, Latin Americans, and Europeans. The very high inventory
of condos and homes available will be eventually absorbed - and faster
than most of us realize. After all, a couple of years of low construction
would be enough.
The newspapers, on July 17th, 2008 were talking of a last month inflation
percentage in the vicinity of 1% or more. Is that scary? Even though they
clarify that it's due to fuel and foods only, while in other items such
as clothing, it was actually negative, I am afraid that, in the longer
term, food and fuel will reflect on all other components. Not only
transportation, heating, energy are affected by fuel prices.
Practically every other item will surely feel the pressure and eventually
ride the inflation wave.
It's a fact that once inflation takes off, it is self-feeding and hard to
contain. Not that I want to be a fear monger, but I have seen this happen
in the past and I have seen banks paying 18% interests on Certificates of
deposit!
It is true that inflation can be a blessing for many mortgage borrowers,
when their interests are at a fixed rate. Imagine paying during 30 years
a mortgage at 6%, when inflation could be in the range of 10 or 15% and
new buyers could be paying an 18% fixed rate! Impossible? Not really, it
has already happened not so long ago.
That's what, sooner than most believe, real estate is due for a strong
recovery. And you better not be too late!
Henry B. Nathan is a Realtor in South Florida.
Please visit my office at Sunny Isles.
I invite you to also visit my website with one of the top real estate
database. Great Search Tools will make your search enjoyable and
successful.
http://www.condo-southflorida.com

								
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