The hidden benefit of inflation for real estate. 🤑

Bring up inflation and most people will feel the anger start welling up inside.

Truthfully, it's for good reason...

We've lived through a dramatic increase in prices on most everything we buy since 2020.

Lunch is now $15.

Groceries have an extra 0 on the end of the bill.

And buying a house feels out of reach for so many people.

Honestly, it feels like inflation and mosquitos have a lot in common.

But nothing is all bad and inflation is no exception.

There's a surprising benefit most people are missing when it comes to inflation and real estate.

We're building a money bomb. 💣

First, you've got to understand some basics.

After the Fed printed a bazillion dollars in 2021, inflation surged to ~9% and the public demanded action. 

In response, the Fed made a number of rate hikes intended to push inflation back down.

You see, when the Fed raises rates, it makes it more expensive to borrow money to buy things so people buy less.

Lower demand = lower prices.

When it comes to real estate, a ton of people balked at 6% mortgage rates and we've seen prices go sideways since the rate hikes.

On the other side of the coin, when the Fed raises rates, the interest you earn on your savings account goes up.

It's an incentive to put money in the bank and let it work for you.

And boy have people done that...

In fact, there's been a nearly 500% increase in the amount of high interest savings since 2018:

Lean in and let me tell you what this looks like to me...

This looks like a money bomb that keeps getting bigger and is just waiting for a spark.

Put simply: we've got a sh*t load of cash just waiting for something to invest in. 

For now, while rates are higher, people are content letting it sit there and earn 3.5% in interest.

But if something changes and there's a better opportunity, the bomb could go off and send a wave of spending into the markets.

Inflation could change it all. 💰

Since interest rates have gone up in 2022, the math has made sense to keep money saved away in money market funds.

With the recent rise in inflation, it's actually costing us all to keep money in savings.

We might be earning 3.5% on our money, but prices are now rising 4% vs. last year and it's eating away our buying power.

Plenty of people who have money saved away (and who are also prime prospects to buy real estate) will get wind of this and moving the money into a new investment could make sense.

And with so much government debt set to be refinanced in the coming year, it's unlikely we'll see significant rate hikes.

Headlines will highlight the need to protect yourself from higher inflation.

But get this..since 2020...

• Stocks are up 126%.
• Gold is up 178%.
• Bitcoin is 597% higher.
• Real estate has only gone up just 57%.

By comparison, real estate actually looks cheap.

Historically, we know it's the safer investment, too.

This is a big reason why I think we could easily see another run up in home prices on the properties available to buy.

What will you do? 🫵

That's the big question...

Will you position yourself and clients to take advantage of this?

Are you investing before the move is made?

Or will you be looking back wishing you would have?

Most people play either offense or defense.

Prioritizing investing in real estate is doing both at the same time.

And the people who will win are the ones who take action before the big moves. 

Nobody knows the future, but the signs are there.

What are you going to do about it?

Dr. Alex Stewart
Founder