That’s certainly news to me. I can’t imagine how our Covid response could have had much of anything to do with inflation. I haven’t read that anywhere, nor have you provided a link.
the stimulus that was part of the response was way overdone. That started under Trump and continued under Biden. You can't pump a trillion $$ into the economy and not get inflation
The Biden Administrations' approach to inflation is to redefine what a recession is. These are the same people who told us reckless spending wouldn't lead to inflation. Then, when inflation rose from spending, they told us it was temporary and transitory. And when inflation wasn't temporary or transitory it was Putin's fault.
Owning your home makes your housing expenses somewhat fixed relative to renting. I say somewhat because your insurance and taxes are still variable although some states, like Florida, cap the percentage that taxes can be raised annually for the homestead. Additionally, the value of the home should should correlate highly with inflation, so the equity becomes an inflation bank. For almost all homeowners their mortgage interest rate is considerably lower than current inflation, so it currently acts as a margin investment. I’ve never heard of the equity being specifically referred to as an inflation hedge but would be interested to see where that was written.
Did the same in '16. Nowhere near that type of deal though! lol but much less than market value. Today its worth double. Lots of sweat equity though.
Corollary. Nearly half of all Americans fall deeper in debt as inflation boosts costs https://www.cnbc.com/2022/07/26/nea...are|com.apple.UIKit.activity.CopyToPasteboard
You'll get no disagreement from me concerning a fixed mortgage that remains constant. What becomes the issue with inflation is the price of goods and services electric, gas, water, home repairs and taxes as you mentioned. Your Home is a Hedge Against Inflation Inflation is the sustained upward movement in the overall price of goods and services while the purchasing value of money decreases. Tangible assets like your home consistently become more valuable over time. In inflationary periods, your home is a good investment and a hedge against inflation.
All of those are either the same whether you rent or own (utilities) or baked into the rent of any lease you sign unless the rental market falls Say your rent went from $1800 to $2200 in an inflationary period. In that same period if you owned a 2500 sq. Ft home worth $350,000 at the beginning your mortgage payment might go up $125 for taxes and insurance. So in a year, the owner is $3,300 ahead in cash and $50,000 additional equity above amortization. The only wild card is repairs. The homeowner is immediately out of pocket for the cost where the renter will see an increase on the next lease.
We did our closing with a friend who runs a land/title company. He said that our closing was the absolute bottom of the market, the gaps between sale price and closing price started shrinking after that. It didn't quite make up for getting stuck with a condo in Gainesville we couldn't unload for another four years, but now that we are a decade removed from dumping the condo, looking at the equity in our house does make things feel better.
Don't get me wrong I have no disagreement concerning the value of a house you own. Where I have disagreement is stating it is a hedge against inflation. You get no return on the house unless you sell. If all you have is your primary home then you must rent or buy another at inflated rates.
You are correct in that it is all a “paper gain” until you sell. My main point is that within the confines of owning vs. renting, owning is a definite inflation hedge.
Well, that is nonsense. That is like trying to claim that everybody in Florida should blame DeSantis for inflation because Florida's inflation has nothing to do with the country's inflation. Are there variances in inflation across states and countries? Of course. But clearly they aren't independent, so they have something to do with each other.
What do you mean when you say this?? Specifically, "the US went full steam ahead into a realm of globalization"? To me this implies that the US government has some say over whether companies chose to expand beyond the borders of the United States or not, and participate in the global energy market. Is this what you are implying??
Depending on policy the US certainly has some say in what industry does. Full steam ahead is US closing down manufacturing and moving to a service industry and even that went over seas (call centers). I don't fault industry for taking the least path of resistance however with that least path of resistance came the implied protectionism of US hegemony. This is why we find ourselves in the pickle we are in.
I have to agree along with golbalization came benifits as well as the issues we currently face. What was missed in the mantra of a rising tide lifts all boats is the understanding that there is also ebb tide that lowers the boats in other areas.
We got into this one right at the perfect time, The house was only 2 years old and the bank paid 3 1/2 percent of our closing costs with a 2 year home warranty. Yes we got some great equity in ours also.
So, you do or do not blame the US government then?? I am not being intentionally obtuse, I am just not quick on the uptake sometimes. I thought part of the consequence one had to be prepared to live with when advocating for highly unregulated markets was that the government did not interfere when businesses moved assets around to optimize their profits, even if it comes at the expense of our country. In the 1980's and 1990's Republicans in general applauded this kind of lassiez faire behavior didn't it?? To my knowledge, the US government has not closed down a single semicondcutor fab, board design and assembly house, SMD manufacturer or contract test facility in the US. However, if you are meaning that things like regulation from agencies such as the EPA drove operating costs up and indirectly closed them, then you may have a point. Being an insider for this industry for 30+ years, I will assert that it is more BS than not, but I would at least grant your point is possibility.
