The Housing Chronicles Blog: Column for September issue of Builder & Developer now online

Friday, September 11, 2009

Column for September issue of Builder & Developer now online

My latest column for the September issue of Builder & Developer magazine is now online. Given the rumblings lately about inflation (and deflation) in the economy, for this month I focused on when investing in housing is a good hedge against inflation. An excerpt:

In the case of real estate, the inflation hedge is really more about the type of debt used – preferably a long-term mortgage with a fixed interest rate – than anything else. But add in the impact of rising prices on rents, and suddenly investing in real estate for passive income and enjoying the various tax write-offs becomes a tried-and-true method (and one used extensively in the 1970s) to build wealth while paying off debt that becomes worth less and less each day.

Of course to address rising inflation, the Federal Reserve will eventually have little choice but to hike interest rates, which could counteract the advantage of real estate’s strength as an inflation hedge. Moreover, the housing inflation of the 1970s was made possible with concurrent increases in wages; given a global economy which has kept a tight lid on wage income, it’s also possible that we’ll see higher prices for oil, food and commodities as home prices continue to stagnate...

Click here for entire column.

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