Inflation has been around here and there, but widespread inflation hasn’t made an appearance for more than 40 years. So for a reminder of what that scenario could look like, John Burns of John Burns Real Estate Consulting shares a blog about the opportunities that rising prices can present for two unique situations.
Inflation can be great for homeowners with a 30-year fixed mortgage because your monthly mortgage cost will be constant while the cost of building a house like the one you own will rise, which can raise the value of your property. And, presuming you have an employer who raises salaries and wages, your income goes up more than usual as your employer passes on cost increases to customers.
In an inflationary environment, you want to be the landlord and not the tenant. That is one major reason that so much money is pouring into rental housing right now. In an inflationary environment where expenses are rising, landlords should have the ability to raise rents on tenants whose incomes are rising as well. In a market with strong demand like today, those rent increases should exceed expense increases.
Related Stories
Affordability
Mortgage Rates Will Likely Keep Rising, but Just How High Will They Go?
Economists are gritting their teeth and bracing for higher mortgage rates ahead, but when will the increases end?
Market Data + Trends
A Real Estate Bubble Could Spell Trouble for the Housing Market, but Is It a Likely Scenario?
The most recent increase in the 30-year fixed-rate mortgage has some experts fearful of a possible housing bubble. Here’s what that could mean for homebuyers
Economics
What a Yield Curve Inversion Means for the Housing Market
Talks of recession are mounting after a rare inversion of the yield curve during the final week of March, but economists aren’t worried—here’s why
