Tuesday Jun 07, 2022
Purchasing a Home in High Inflationary Times
Everybody's starting to look at the fact that more homes are now going are, are reducing their price before sale. I talked about this in the DMAR report that we just did last week in the video talking about the fact that those people that had to do a price reduction were on the market for an average of 28 days. That is a massively long time compared to what we've been feeling and how fast the market has been moving nationally. That number is up to 24% of homes are discounting their price before they sell. Historically, that number is at a third 33%. We are still well below normal.
And when we get to normal, it won't even feel like normal because we've been so fast for so long. Keep everything in perspective. Yes. I know interest rates are high and yes, I know home prices are high, but appreciation will continue because demand is going to continue. Existing homes cannot fill all the gaps in the past. Somebody had sold a home and purchased a home. Now they're holding onto that home and they're converting into a rental. Now they're keeping it in the family and selling it to a family member with a gift of equity. They are maintaining the home or they're aging in place. They're taking that equity. They're pulling some of that equity out and they're converting that home into a rental property and buying the next primary home with the equity that they've pulled out of it. That's what we're seeing a lot of in this market.
We need to see more turnover. Obviously, we're seeing a little more inventory. Fantastic. None of this means that we're going to head into a housing bubble. Interestingly, last week we had several economic indicators. We had the unemployment state flat at 3.6. We had ism manufacturing index came in stronger than expected. Yes, consumer confidence is down, but that's based on the price of everything.
Real estate is the best hedge against inflation. We are not headed towards a housing bust, will the economy slow? I hope so will spend slow. I really hope so. Because consumer spending is 70% of the GDP. I hope all of those things happen. I hope appreciation slows down. Would it shock me if we had a 0% appreciation next year, a little bit, a little bit, but I wouldn't be upset about it because I know that the value of my home is holding and that it is a hedge against inflation, the cost of everything. And that rents
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