THE CREDIT CRISIS: AN ECONOMIC ROLLERCOASTER RIDE RICK TOBIN
less stocks, bonds, real estate, or other assets in the near or long term. Additionally, the creation of too much
capital in recent years had led to massive inflation or hyperinflation for various types of products like gasoline,
as noted above, food, clothing, and other basic commodities.
With Real Estate: Inflation is much better than Deflation
With real estate, inflation tends to be a positive for both current and future appreciation levels. Historically,
homes in the USA have appreciated close to an average of 3% per year over the past fifty (50) + years.
Between 2012 and 2013, the median priced home in various U.S. regions has increased between 5% and
25%+, due to the combination of near record low interest rates, artificially suppressed home listing inventory
levels, and an increased demand from individual and institutional investors.
Homeowners,
retail
shopping
center
owners, and other property owners are
more likely to “walk away” from an “upside
down” property than owners who have
equity in their properties. Thankfully, more
properties
nationally
have
gone
from
negative equity to positive equity in recent
years due to rapidly increasing sales and
prices. There are few things worse for an
investor to have then mortgage debt
currently exceeding their property values.
For many Americans, the bulk of their net
worth comes from real estate more so than
for any other type of investment option.
Improving equity in real estate nationally
also may lead to a more prosperous
economy, and hopefully to more jobs
created as well.
Tragically, the recent stock market boom has only benefitted a very small percentage of Americans who are
fortunate enough to actually even own shares in Dow Jones, or other stock indices. Yet, the recent price
improvements in the U.S. housing market have helped more Americans feel a bit more prosperous and happy
here in 2013.