In this short video clip, I talk about how during inflationary times, your money is losing more of its value each day. Purchasing, updating and holding on to real estate may help you keep and grow your money over time. It's also a great strategy for long-term wealth building.
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"Hi there! I wanted to jump on here real quick as a follow up to my last video where I talked about the impact of the Feds raising the Feds funds rate was having on the real estate market and more specifically, the opportunities it was creating for would-be home buyers.
I did field a number of questions from folks wanting to know if I still thought that it was a good time to buy or sell a home, especially with all the news we've been hearing about us being in a bear market, inflationary concerns, a possible recession coming down the pike. And I really do! And the reason for that is because economic uncertainty isn't necessarily tied to real estate performance. What I mean by that is that actually in the last 4 decades, there have been 6 recessions. And only 2 of them have resulted in a depreciation of home prices. In 4 out of the 6 recessions, we've actually seen home values increasing. And now those 2 events, one of them happened in the 1990s where I think home values nationally decreased around 1.9 or 2%. And of course the second happened in 2007/2008 and that was due to the mortgage lending crisis.
And often what you'll hear in times like these, where inflation is a concern, is that people talk about real estate as being a hedge to inflation, meaning people start investing in real estate as a way to protect the value of their money. Because as we know, inflation erodes the value of our money over time. And the reason i think people turn to real estate is for several key reasons: 1) tangibility, 2) control and 3) flexibility.
Let's talk about tangibility. So what I mean by that is with real estate, you can actually touch it, you can hold it, you can run your hands through the dirt on your property. And it's very different from say, owning 100 shares of Google, which kind of floats out in the ether, right? So in times of uncertain economic conditions, it feels good to people being able to hold onto something tangible.
The second is control. We've seen lately that there's been lots of volatility in the stock market and crypto. And people often feel like they're just along for the ride, like they have no control, no matter what they do, even if they were to invest more money into buying more stock, what happens with the stock market is out of their control. It's a little different with real estate. With real estate, when you own a property, you can actually do some capital improvements and that can be painting the house, renovating the kitchen, updating the bathrooms, and there's a sense that later on, that money will come back to you. You get a return on your investment and everything that you do to update the property improves and increases its value.
The third is flexibility. For example, if you want to, you can live on the property and if you need to, you can rent it out for extra money. For cash flow. So that's what's nice about real estate."
