Inflation now at 9.1% in the USA

[Moontrane]

Go to a Dollar Tree store. Everything used to be a dollar. They did a markup for all items. Everything is now $1.25. That’s 25% inflation for junk items.

[Mayday]

It is only a matter of time until the media starts pushing stories about how this inflation is actually good for us.

It is.

It devalues debt.

I bought a new Ute in Feb 2020. I can sell it for what I paid for it today after using it for 2.5yrs.

I bought land and built a high spec large home. I used 90% LVR which is now 45% without me doing anything.

The important part is you need to do as much as you can at the start of the inflationary cycle, not the end.

[Thin Lizzy]

It is.

It devalues debt.

I bought a new Ute in Feb 2020. I can sell it for what I paid for it today after using it for 2.5yrs.

I bought land and built a high spec large home. I used 90% LVR which is now 45% without me doing anything.

The important part is you need to do as much as you can at the start of the inflationary cycle, not the end.

But the money you get is worth less.

That said, you’re  right that inflation or what it really is, counterfeiting, works best for those who get the newly created money first, the financial sector, before prices start to rise.

[El Diablo Blanco]

If shit was up just 9% it wouldn’t be that bad.  Everything is up wayyyy more. 

[Primemuscle]

Real Estate self-adjusts. When interest rates were low a few months ago, folks were buying properties like crazy which drove the prices up considerably. With the increase in interest rates, I'm seeing price reductions on properties not selling quickly. According to Zillow, my house lost about $18,400 dollars or 2.3% in value in the past 30 days… not that I was planning to sell anytime soon.

The previous housing crash was a killer for people who bought high because it left many 'under water' and therefor unable to sell for the amount owed on a property, which forced a lot of folks to 'walk away' from their homes thus allowing them to be foreclosed on.

Folks like me who bought homes 20 or so years ago and never refinanced, survived that downturn in the market because we owed less than the property was worth and because we didn't have to sell it.

Renters are in a more volatile position unless they live somewhere where there is rent control. Like New York, rents in Portland have surpassed incomes to the point that many folks cannot afford to live here. They have a couple of choices which are not great options. They can life some distance away which requires long commute times, they can double up with roommates, or get second and third jobs to make ends meet.   

[Hypertrophy]

It is.

It devalues debt.

I bought a new Ute in Feb 2020. I can sell it for what I paid for it today after using it for 2.5yrs.

I bought land and built a high spec large home. I used 90% LVR which is now 45% without me doing anything.

The important part is you need to do as much as you can at the start of the inflationary cycle, not the end.

Then the interest rates on debt skyrocket- leading to a net loss. Like all financial swings, those who make the play early do ok. But that is one shit way to run an economy since those on fixed or retirement incomes get slaughtered. Not everyone is Gordon Gecko.

[IroNat]

Real estate can really mess you up if you buy at the wrong time and overpay.

It can kill you.

[ThisisOverload]

Real estate can really mess you up if you buy at the wrong time and overpay.

It can kill you.

My brother purchased a nice house last year.

Going to lose his ass.

Also, Zillow is not accurate at estimating the value of your home. If you want real value, have a realtor provide comps per square footage of recent sales in your subdivision.

[loco]

Real estate can really mess you up if you buy at the wrong time and overpay.

It can kill you.

I know very successful real estate investors who bought many of their best properties from failed real estate investors who were forced to sell at a loss because they didn't know what they were doing.

It's a good investment that can make one very wealthy, but it's not passive, requires a lot of work, and it's very easy to screw up if you don't know what you're doing.

[ThisisOverload]

I know very successful real estate investors who bought many of their best properties from failed real estate investors who were forced to sell at a loss because they didn't know what they were doing.

It's a good investment that can make one very wealthy, but it's not passive, requires a lot of work, and it's very easy to screw up if you don't know what you're doing.

My 3 rentals were purchased just after the 2008 crash.

I sold one of them 2 years ago for 3.5 times what i paid for it in 2009.

It's a dangerous game to be played.

[loco]

My 3 rentals were purchased just after the 2008 crash.

I sold one of them 2 years ago for 3.5 times what i paid for it in 2009.

It's a dangerous game to be played.

Congratulations!

[Primemuscle]

My brother purchased a nice house last year.

Going to lose his ass.

Also, Zillow is not accurate at estimating the value of your home. If you want real value, have a realtor provide comps per square footage of recent sales in your subdivision.

There are at least 10 online Real Estate sites all of which estimate property values and most of which including Zillow use comps as an estimating tool.

Estimating by square footage is fine, but it is not the only consideration. Number of rooms, i.e., bedrooms and bathrooms are important.
 
What a realtor does that these sites do not is determine how showable and sellable your place is which takes into consideration its condition, including updates and remodeling. Some homes 'show better' than others, they are often the ones that sell the fastest.

What a property looks like online is often not how it does in person. There are camera tricks that make a small space seem larger. Virtual staging is also a tool realtors use to encourage people to want to see the place in person.

Often the lender has the final say over a property's value. 

[Coach is Back!]

https://www.breitbart.com/politics/2022/07/18/poll-joe-bidens-economic-approval-rating-crashes-new-low/

[ThisisOverload]

There are at least 10 online Real Estate sites all of which estimate property values and most of which including Zillow use comps as an estimating tool.

Estimating by square footage is fine, but it is not the only consideration. Number of rooms, i.e., bedrooms and bathrooms are important.
 
What a realtor does that these sites do not is determine how showable and sellable your place is which takes into consideration its condition, including updates and remodeling. Some homes 'show better' than others, they are often the ones that sell the fastest.

What a property looks like online is often not how it does in person. There are camera tricks that make a small space seem larger. Virtual staging is also a tool realtors use to encourage people to want to see the place in person.

Often the lender has the final say over a property's value.

Thanks Google.

I've been flipping houses for 20 years.

Zillow absolutely is not accurate.

For reasons you just mentioned.

[Primemuscle]

Thanks Google.

I've been flipping houses for 20 years.

Zillow absolutely is not accurate.

For reasons you just mentioned.

My parents flipped houses in L.A. County starting in the mid 1950's. We moved a lot. Their first house was in West Los Angeles. A small 3 bedroom, 1 1/4 bath on a city lot with a detached garage. They basically just painted it inside and out and fixed up the landscape up a little. They made a tidy profit which they parlayed into the next house and so on for many years. Their mistake was to keep buying more expensive houses until eventually they were in one, they could not afford. It is a tough business, especially if you live in the houses while fixing them up.

No doubt you know more than I do about today's market and flipping houses. My wife and I have only owned 4 houses since we got married. All of them needed cosmetic work. We weren't flipping them though, they were home. The longest I've ever lived in one house or one place for that matter, is where I live now.

My wife and I bought my current home in 1999 from a couple getting divorced. We paid $214,000 for it. It was in good condition, but it was built in 1977 and never remodeled. We lovingly referred to it as the Brady Bunch house. The property was a forest of large trees, mostly firs and oaks, which made it impossible to landscape. I've put a veritable fortune into maintaining. remodeling, landscaping, and upgrading the mechanics, i.e., the furnace, air conditioning, tankless water heater etc. According to a friend who is a realtor, it is presently worth around 4 times what we paid for it today. Coincidentally Zillow agrees. But that’s a moot point since I have no plans to sell it. 

[Earl1972]

Thanks Google.

I've been flipping houses for 20 years.

Zillow absolutely is not accurate.

For reasons you just mentioned.

do you hire contractors or do it yourself?

E

[tommywishbone]

If shit was up just 9% it wouldn’t be that bad.  Everything is up wayyyy more.

Bingo.

Nine percent is shit. 109 percent is fucked.

[ThisisOverload]

do you hire contractors or do it yourself?

E

I did it myself the first 6-8 years, my cousin is a home builder and helped me a lot.

Sometimes i'd pay one of his crews a day rate when i needed large renovations. To help me for a few days.

There are many things that are worth paying for.

But i have a plan to re-develop areas that will see future growth, so 9 times out of 10 i make a profit. Not always a big win, but not a loss.

It's a difficult plan, but i've been working in residential development most of my career, so i know the ropes.

Lost my ass twice, learned a lot. Learned to focus on strategic locations over cost.

Almost all of my homes were in college towns, easy to make money in that environment. Those areas never lose money.

[ThisisOverload]

My parents flipped houses in L.A. County starting in the mid 1950's. We moved a lot. Their first house was in West Los Angeles. A small 3 bedroom, 1 1/4 bath on a city lot with a detached garage. They basically just painted it inside and out and fixed up the landscape up a little. They made a tidy profit which they parlayed into the next house and so on for many years. Their mistake was to keep buying more expensive houses until eventually they were in one, they could not afford. It is a tough business, especially if you live in the houses while fixing them up.

No doubt you know more than I do about today's market and flipping houses. My wife and I have only owned 4 houses since we got married. All of them needed cosmetic work. We weren't flipping them though, they were home. The longest I've ever lived in one house or one place for that matter, is where I live now.

My wife and I bought my current home in 1999 from a couple getting divorced. We paid $214,000 for it. It was in good condition, but it was built in 1977 and never remodeled. We lovingly referred to it as the Brady Bunch house. The property was a forest of large trees, mostly firs and oaks, which made it impossible to landscape. I've put a veritable fortune into maintaining. remodeling, landscaping, and upgrading the mechanics, i.e., the furnace, air conditioning, tankless water heater etc. According to a friend who is a realtor, it is presently worth around 4 times what we paid for it today. Coincidentally Zillow agrees. But that’s a moot point since I have no plans to sell it.

Just messing with you Prime.

Zillow is a good benchmark for home value, but isn't always accurate.

A lot goes into the sales price of a house, as you stated.

My house i lived in for 6 years in Houston, Zillow had it at 370k, but because of the subdivision i lived in and the fact it was in the back of the neighborhood surrounded by much more expensive homes, i was able to sell it for 100k over that. It was the smallest house in the area and had good "bones". People will pay a premium for that.

School districts dictate a lot too, it was in an area that had one of the best public high schools around and a very fancy private high school too, just 2 miles away.

All those things drove it up more than anticipated. I was patient and left it on the market until someone offered what i wanted. Houses were selling in days/weeks and i held for 7 months.

[Gym-Rat]

.

[Mayday]

Then the interest rates on debt skyrocket- leading to a net loss. Like all financial swings, those who make the play early do ok. But that is one shit way to run an economy since those on fixed or retirement incomes get slaughtered. Not everyone is Gordon Gecko.

There’s already runaway inflation in some good sized countries. China’s can’t be counted on for growth anymore.

The money printing game is over

“Voluntary abandonment” is the only option:

Which encourages saving.

Go back to when the Boomers were young, sky high interest rates yet they all came up with the 20%-30% deposits inside a year by the time they were 22.

Under the right conditions the 5yr cycles were some of the largest growth and money making opportunities.

People are complaining about the extra $0.30 they pay for milk yet they aren’t complaining about the 300k price increase on their investment property.

[IroNat]

Which encourages saving.

Go back to when the Boomers were young, sky high interest rates yet they all came up with the 20%-30% deposits inside a year by the time they were 22.

Under the right conditions the 5yr cycles were some of the largest growth and money making opportunities.

People are complaining about the extra $0.30 they pay for milk yet they aren’t complaining about the 300k price increase on their investment property.

Most Boomers used FHA low downpayment mortgages to buy their first homes.

20-30% down at age 22?  No way unless their parents helped them.

It took me a few years to save up the minimum down + closing costs and escrows.

That was close to $7500 in 1984 on a $50,000 house with an FHA mortgage.

How old are you Mayday?

[Thin Lizzy]

Which encourages saving.

Go back to when the Boomers were young, sky high interest rates yet they all came up with the 20%-30% deposits inside a year by the time they were 22.

Under the right conditions the 5yr cycles were some of the largest growth and money making opportunities.

People are complaining about the extra $0.30 they pay for milk yet they aren’t complaining about the 300k price increase on their investment property.

Prices going up does the opposite. People buy asap because the price will be higher in short order.

If currency devaluation is so great why not make the currency worthless. That would be awesome, right?

And if money printing is so great why not let everybody do it and not have governments being the only ones having the fun?

The current system is based on a few central planners pushing all the right buttons at the right times, the antithesis of a free market.

[Thin Lizzy]

Then the interest rates on debt skyrocket- leading to a net loss. Like all financial swings, those who make the play early do ok. But that is one shit way to run an economy since those on fixed or retirement incomes get slaughtered. Not everyone is Gordon Gecko.

It’s a good way to run an economy if you want a bloated inefficient government which spends beyond its mean and sucks the life out of the private sector.

[Primemuscle]

Just messing with you Prime.

Zillow is a good benchmark for home value, but isn't always accurate.

A lot goes into the sales price of a house, as you stated.

My house i lived in for 6 years in Houston, Zillow had it at 370k, but because of the subdivision i lived in and the fact it was in the back of the neighborhood surrounded by much more expensive homes, i was able to sell it for 100k over that. It was the smallest house in the area and had good "bones". People will pay a premium for that.

School districts dictate a lot too, it was in an area that had one of the best public high schools around and a very fancy private high school too, just 2 miles away.

All those things drove it up more than anticipated. I was patient and left it on the market until someone offered what i wanted. Houses were selling in days/weeks and i held for 7 months.

As you know, there are some rules of thumb for flipping houses profitably. Smallest house needing the most work in a neighborhood is a pretty sure bet. You are sure right about school districts. West Linn and Lake Oswego our neighboring suburb have the two best school districts in Oregon. What is hard to predict is the emotional side of choosing a property. Sometimes the buyer clicks with the house, maybe it reminds them of good times or their childhood home.

There is a lot of money to be made flipping houses but if you get it wrong, there is also a lot to lose. Like my parents, I bought nicer houses in better neighborhoods. One difference between us is that I invested my profits from the previous house buying the new house, so the mortgages were always manageable. My current house payment is less than what you can rent a 1-bedroom apartment for in my neighborhood. Property taxes are a whole other issue.

It just so happens that the dump I bought in a then seedy Portland neighborhood back in the 70's for which I paid $13,000, is close in value to the house I have now because it is just a couple of miles from downtown Portland. That rundown neighborhood is one of the most sought-after places to live in Portland. A couple of years ago the owners let me tour the house. It was okay, but nothing special unless you happen to love bungalows built in 1910 with original fir floors and beefed-up millwork.

There's a house for sale in West Linn with an asking price of $42,000,000. It is a Willamette riverfront house with 11 bedrooms 18 bathrooms and 51,908 sq ft. And I believe it is still under construction. Many houses in this little town sell for million or more. Looking at the big picture, my house value is quite modest. Sometimes I think a lot of my neighbors have stock in Tesla because there are so many of those over-priced cars around here. LOL! I drive a compact Mazda that's 6 years old.

(virtual exterior photo)