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.
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[…] Original post by REMonsoon […]
Pingback by Stagflation and Real Estate, Tucson Arizona · Real-Estate-Investing.ExplainedOnline.Net — July 28, 2008 #
If the fed keeps putting money into new mortgage paper with Fannies and Freddie, the money will eventually hit the market. So far it is only hitting in the conforming mortgages. I wrote about 10 weeks ago for the fed to borrow on long term treasury’s and put the money directly into new mortgages at low rates to get the market going. I also said they should provide investor financing to get the foreclosed homes bought and rented. Investor will bring a lot of capital to the market. All buyers must qualify under normal standards.
My investigation also finds the heavily hit markets are reacting to the lower prices and lower rates and volume is picking up nicely.
The banks can not get the money directly, they won’t lend or at least not at the rate and quantity we need. When a purchaser gets a mortgage, buys a property, the old mortgage gets paid off to the bank. The bank receives the money and the mortgage is retired. If the bank’s reserves we short to retire the mortgage that is another issue for their solvency.
Comment by Richard Stabile — January 22, 2009 #
I will be interest in reading those next articles
Comment by M — March 6, 2009 #
I would like to read further articles on this. Where can I find them?
Comment by Brewer Caldwell — April 2, 2009 #
I dropped back to revisit. Your market has picked up niecly at lower prices. Our market has picked up also this spring in Bergen County New Jersey. Lets hope it all continues.
Comment by Richard Stabile Bergen County Real Estate — June 22, 2009 #
Checking back with you, the money has hit the market with government paper infusions. The market has picked uop nationally and there has been a lot of improvement. Pricing however is float to down in most and slightly up in some overdone areas. All I will say about future values is that it will never be what you think.
Comment by Richard Stabile Bergen County Real Estate — July 10, 2009 #