Did you know that real estate is one of the best hedges against inflation? Even though inflation is starting to come under control, it’s still a big issue for most Americans. One of the biggest impacts on the average American is rent costs. Rent has been flat for a bit, but it’s starting to rise again. In June 2024, rents went up by 3.5%, the highest increase in about a year.

This is a great opportunity to talk to renters in your community about how they can get ahead of rising rental prices by buying a home.

Here's the message:

"Hey guys, you might not have heard, but rent prices have gone up 3.5%, the highest in over a year. Because of that, you might want to start considering buying a home. Yes, interest rates are a little higher than we'd like them to be, but when you buy a home, as long as you can make that payment, it stays stable for the next 30 years. The only things that might increase are your taxes and interest, but your core payment remains the same.

Imagine...

Here's some good news about the real estate market, and we need some good news right now:

As of the second quarter of 2022, home ownership rates were rising. So that's good.

And we say, well, why would anyone not want to be a homeowner? Right? When we're in the real estate business, we think everybody should be a homeowner.

But sometimes, renters have a hard time getting over the hump of deciding if it is a good idea to become a homeowner. Especially when we're seeing interest rates rise. We've seen prices still rising in some markets by double digits.

One thing you can point to, which is really powerful, is the concept of inflation.

Everybody knows what inflation is and inflation is touching everybody. And so you can point out that, "Hey, you know, I'm sure you're aware that inflation right now is at a record high, a 40-year high. The last reading was 8.5% inflation. But what people don't realize is that rents are...

There's a "four alarm fire" happening in the real estate industry today:

What is it?

Interest rates.

Interest rates are rising extremely rapidly. Now we knew coming into 2022 rates were gonna rise. The anticipation was from Mortgage Bankers Association, NAR, Fannie Mae and Freddie Mac, etc. The consensus was 3.7% by the end of 2022.

But what has happened?

First week in January, rates went to 3.12%. Second week in January, rates went to 3.45%.

Wow — that's almost a vertical rise!

So what's the messaging here?

The messaging for our buyers and sellers is get off the fence and get into the market.

Now, why are rates rising so quickly?

Well, we know that the Fed had told us already that they were gonna raise rates three times in 2022 to fight inflation because inflation's at a 50-year high and 7% was the latest number.

So their #1 goal was to fight inflation.

They also announced they were gonna stop buying mortgage-backed securities...

Lawrence Yun was recently quoted as saying, "If you are under the age of 40, you have never seen inflation this high in this country."

The inflation rate in November hit a record 6.8%. That's the highest we've seen in decades.

So when we look at these numbers and everybody's talking about inflation, how does this relate to estate?

It's an interesting conversation. It's something that we should talk about with our clients.

Here's the good news when it comes to real estate:

Real estate is a tremendous asset and a hedge against inflation. That's why last year, we saw a record number of people investing in real estate. In fact, it was the the highest recorded ever. The percentage of homes purchased was 18.2% were sold to investors.

One reason is they're using it as a hedge against inflation.

So here's what's happened according to Lawrence Yun. He says that real estate has proven to be a good hedge against inflation. Some examples:

In the 1970s,...

Hey guys, a recent report shows that inflation is rising rapidly. It's the highest it's been in 13 years — up to 5.4% right now. When we look at that number, we should look at it from the perspective of: How does that impact us as REALTORS and our clients?

As REALTORS, the one thing we should be concerned with is if we took $100k and we put it in the bank and waited a year, based on this inflation rate, then at the end of the year, our $100k would only buy $94,400 in goods. So that's not a good thing. We need to make sure that we're investing in assets that are rising faster than inflation.

And we need to encourage our clients to do the same thing.

One of the best hedges against inflation is real estate. Which is good news for us.

We need to be talking about this with all of our clients that real estate is one of the best hedges against an inflationary market.

One of those reasons for that is that we can look at appreciation...

What's one thing we all need to be concerned about?

Inflation.

We're starting to see inflation rise across many spectrums of the economy. And it is a little bit unnerving when we look at it. Inflation has actually crossed the 2% threshold it's actually past 4% right now.

It's different every month, but it's rising fast across all kinds of asset classes and employment. We're starting to see that real, serious pressure on wages. And a lot of wages have driven up.

We now have more job openings in our country than we've ever had recorded before. Think about what I just said: Job openings are wide open.

This idea that we have an unemployment rate is almost ridiculous because every American -- based on the amount of openings right now -- could be employed. They're choosing not to be employed in some areas or they're choosing not to go to work because of wages or whatever. But in a lot of areas, there's not just enough jobs, there's too...