Stagflation and Real Estate, Tucson Arizona

July 28th, 2008 Categories: Buying Tucson Properties, Real Estate News, Selling Tucson Properties, Tucson Real Estate

What happens to Real Estate values when we end up with stagnant growth and inflation? The answer

is simple. It depends.

Stagflation is a fancy term for stagnant growth and inflation. This awkward economic crunch occurred during the oil issues we had in the U.S. during the early and late 1970’s.

So how does inflation and stagnant growth impact the value of Real Estate in Tucson, or anywhere for that matter.

1. Inflation will usually lead to higher interest rates. This will increase the cost of borrowing money. High rates could drive prices down, however, when stagflation is occurring, it may not.

2. Stagnant growth is already noticeable in many areas. Building of new homes has dropped, jobs are becoming harder to find, and people are staying home a bit more and spending less.

The two items I have pointed out sound a bit dismal, but there is a silver lining.

There will be a few articles to follow this one that will explain in detail the silver lining.

Those articles will cover:

1. The cost of borrowing money

2. The positive side of higher fuel costs

3. Why interest rates have to increase

4. How you can make a good Real Estate investment in this market.