A Possible Silver Lining for Real Estate

Upon reflecting on what’s going on in the economy – and let’s face it, it doesn’t sound good, look good or feel good – so I thought there has to be another way of looking at the mess.

We are in a unique period in our economic history. There are rumblings by OPEC, China and the EU that the US dollar may no longer be the currency of choice. We are also told that our inflation rate is 2-3% a year. But do you really believe that stat?? I don’t. Everything around me is going up in price – gas, imported clothing, imported fabrics and wall coverings, food, wine, electricity, health insurance. When $40,000 buys you a year’s worth of college tuition or a middle-of-the-road car, I’d say we have mega-inflation.

So where am I going with this line of reasoning….tangible assets…..the perfect inflation hedge. And most of them are going up, up, up….Gold is at a 30 year high, fine art is appreciating by leaps and bounds, oil – well you know the story there. And, then there is real estate. As a student of finance, I was taught that real estate was viewed as an inflation hedge. It might not feel that way today as we live through the sub-prime mess, but wait, if inflation continues to creep, real estate will play its traditional role in the financial markets – not a buy it and flip it asset, but a tangible, limited resource that is a long-term storehouse of value. I say think location, location, location for long-term real estate plays!

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