Election Season Overdrive

The next few weeks will be a roller-coaster of exhausting politics as the November elections approach. There is one thing as it relates to housing that worries me most about all policies I hear being promoted and suggested all seem to be almost certain to fuel inflation. And inflation usually results in higher interest rates which impacts our world in real estate.

We may be entering a window of even lower rates and that could be a narrow one: almost all of the policies being suggested are almost certain to push prices for the consumer up. Whether temporarily or long-term or eventually is anyone's guess. $25k first-time homebuyer subsidies could fuel prices upwards if they are not directly linked to increased supply. Increased tariffs on all imports are almost always passed on directly to the consumers that results in higher consumer prices. When taxes are lowered, there is more money out there to be spent which usually fuels demand and pricing. When taxes are raised, someone has to pay for growing deficits.

I don't have the answers and I'm not speaking to 'one side' or the other, but one thing I am certain of: most proposals seem to be ignoring their impact on pricing and inflation. Will inflation soar back up to 9%? Unlikely, but 4-5% would still be high enough to again suggest rising rents: compounded, 4% inflation takes a $3,000 per month rent to over $4,400 per month in a decade.

Higher inflation = Higher borrowing costs. Period. And that may mean that as we enter this coming period of lower rates, that may be a shorter-than-we'd-like period and an opportunity to buy with better options, before things change again? And yes, the only certainty of markets is change.

-Erin