As 2022 comes to a close, people are wondering where the US’s housing market is heading.
Many folks, still shellshocked by the 2007-2008 financial crisis, believe we’re going to see a repeat of the housing collapse of the early aughts.
While such a narrative seems appealing, the problem here is that people don’t understand how different the housing environment is in 2022.
For one, inventory levels are still incredibly low even with some marginal increases in recent months. It’s often forgotten that low-price entry level housing has not been built in well over a decade.
Plus, there aren’t many distressed homeowners in the present. To have any form of housing crash, you must have large amounts of distressed homeowners.
Thanks to the inflation, as nasty as it may be, people who own a lot of real estate, are landlords, and have 30-year-fixed rate mortgages locked in stand to benefit from this inflationary environment.
On top of that, the high interest rates puts upward pressure on rents and forces people to stay in the renter pool.
After all, people can buy, rent, or go homeless.
Since housing is such a basic need, people will end up settling with renting. This is a god-send for income property investors searching for cash flows.
Under inflation, an income property investor holding a mortgage is effectively getting paid to borrow money.
That’s the beauty of acquiring income properties. They’re cash-flow generating machines that allow you to build wealth even in the nastiest of inflationary times.
Debt is often demonized by financial pundits but when inflation hits, it’s an asset. Plus when you have tenants assuming the carrying costs of the mortgage while inflation chips away at the debt, it’s a major win for you, fellow empowered investor.
No matter what the economic future holds, income property investors are poised to have a reliable cash flow-generating asset under their control.
Nevertheless, it’s still valuable to learn about what to expect in the future, economically speaking.
So don’t miss out on Jason Hartman’s recent analysis of housing trends in 2023 and beyond.
