Stagflation and real estate

[lowesthangingfruit]

Any comments on what tends to happen with real estate markets in times of stagflation ?? Would be curious if anyone could shed some insight. Thank you.

 

[Roy G Biv]

Inflation + zero growth = money being worth less, and not being able to earn more to compensate = less spending = stagnant real estate market.

That's my simple explanation.

 

[takefive]

I bought my first house during the stagflation era of the early 80s. I paid 65K and got a mortgage at 16% I believe. Seven years later mortgage rates were about half and I sold the house for double.

 

[Granny]

I bought my first house during the stagflation era of the early 80s. I paid 65K and got a mortgage at 16% I believe. Seven years later mortgage rates were about half and I sold the house for double.

I know where 'takefive' is coming from. Nothing is forever. Ten year cycles is the MINIMUM one should think in when it comes to real estate. Without throwing out too many cliched lines out here. Nothing is forever. Good times come and every 'expert' will tell you this is the way it is going to be ..for a long long time. One day 'good times' melt away.... fast. Out come the 'experts' again. Its going to be doom and gloom forever from now on.
We called these things, cycles. Remember ...minimum 10 years.. How many decades do you figure you are good for. Plan accordingly, buy quality, buy location....and hang on.

 

[lowesthangingfruit]

I bought my first house during the stagflation era of the early 80s. I paid 65K and got a mortgage at 16% I believe. Seven years later mortgage rates were about half and I sold the house for double.

I am admitedly a bit young to remember that time frame, but I believe that was the prior full blown bull run in real estate is it not ?? Seven years doubling would be around a compounded average annual return of 10%. Does anyone remember or have a chart going back that far how the TSX, S+P500 and MSCI EAFE performed during that time period for comparison ??

 

[lordmandeep]

My dad had a mortgage worth more then his house back in the early 90's.

That really sucks.

 

[Urban Shocker]

I lived frugally in a small rent-controlled apartment, and saved as much as I could throughout the '80s when bank interest rates were high, made a large downpayment on a place in '90 when house prices were falling, and paid off the small mortgage before I was 40. If I'd waited a few more years I'd have saved more, and with house prices drifting lower buying a place in '95 or '96 would have been a "smarter" move financially ... but I think the most important thing is to buy a home you like and enjoy it.