Real Estate During Inflationary Times 

Full Video Transcript Below

[00:00:00] Well, good morning real estate fans, Alice Lema, broker, John L. Scott, beautiful Southern Oregon. Another edition of my weekly podcast. This has been so fun. We're getting great feedback. People are, are trying out some of these techniques and tips and sharing it with their friends and .Family we're getting we're getting some good feedback. Thank you for that.

[00:00:18] Today we're going to talk about inflation. Are we back to the eighties? Who knows, but that's, we're going to talk about so and what it has to do with real estate and how real estate might or might not help in that situation. So it's going to be a great podcast today.

[00:00:31] In the meantime, before we get started, please take a second and subscribe to the channel. Give us a, like give us some comments, some questions, share it with your friends and family. It's an educational endeavor here. We want the word to get out. Cause this is what everybody's talking about. Every week we pick something that's really, you know, real time in everybody's mind and conversation.

[00:00:50] Okay. So with that behind us, let's get on with the podcast this week. Back to the eighties question and my question mark, I've got three things to consider regarding your real estate during inflationary times. So first of all, let's just acknowledge the inflation is here. Okay. I don't know about you, but my gas bill doubled , in less than a year.

[00:01:09] And that has a big impact on some, some people's pocket books, especially they drive for living which I you know, pretty much do. And then the price of meat and the price of this and the price of that. And God forbid, you should try to remodel or build something. Then you've got materials, supply chain, problems, labor, you know, everything, everything.

[00:01:28] And then boom, boom, boom prices up and up and up. So it's happening right now. So let's just call it out, call it what it is. But for those of us who remember the seventies and eighties, and I'm throwing it in the seventies because I was there and in my recollection, that's when it started and it was the oil crisis and the embargoes and waiting in line and petroleum products.

[00:01:51] And we were, we had so much dependency on plastics and it was really causing a hardship back then, So I think because I'm just speaking personally, it started in the seventies and then worked up to the eighties and then like then was the, the bigger crisis. But inflation is here. It is now if you're not familiar with this because you weren't there.

[00:02:13] Then welcome to the world of inflation. This is what it's like, you had money yesterday, you don't today and you didn't change anything yourself. So you just have to kind of pull back on your budget. You've got to make different choices. And some of that is your choices and investments. So we're going to talk about that at the end of the podcast, but just acknowledging we're in that situation right now, a lot of us are worried that it's going to be like the eighties again.

[00:02:39] And I want to say, there's one reason this is different and it has to do with unemployment. So back then there was a lot of unemployment and that's a completely different animal when you have inflation and unemployment at the same time, our situation right now, at least for now not good. We have underemployment.

[00:03:00] We're still coming out of the pandemic. Some people would call it a post pandemic. I call it getting used to a pandemic but whatever you call it, we're, we're allowing that we still have alot of people that didn't go back -to work yet. And there's different reasons why, I mean, there's a joke that they're still sitting on the couch, cashing their checks and playing video games.

[00:03:20] But I think you know, in, in my world, I'm talking to a lot of these people and they're making choices, especially if they're a family partnership or they have a caregiving responsibilities. One of the working adults with working ability, a jolt, I guess you could call is making the conscious choice to not work.

[00:03:39] And they're doing other things. They're starting a business. They're going back to school. They're caretaking elderly, they're caretaking babies. So it's conscious and they don't plan on going back to work. So yeah, and then you throw in just a minuscule of people in that group. They sold their house and made $200,000 and they're living small and they're not going back to work either, at least no time soon.

[00:04:02] So, but that that creates a different environment when you have inflation and underemployment and that's different than what we had back in the eighties, unemployment. And I remember in our household during the eighties, it was scary. We were so worried about people losing their jobs, our neighbors, our friends, our family, us, you know, it was just, you know, a lot of people did not have jobs, could not find jobs.

[00:04:25] And these are people that were very well-trained educated, you know, all that, good resumes. So, yeah so if you're an older person and you're experiencing that, that anxiety I really encourage you to go back and read some of what was happening back then and how our government and our economic people responded and what happened because of those actions and responses.

[00:04:47] But also the, the unemployment, just shocking. It really was. And that's different from what we have now. And again, I'm not an economist. I don't play one on TV, but I'm an older person. I was there. I'm here. Now. I'm feeling the anxiety too, because it feels familiar and I had to stop and think, okay, what's different. It's the employment.

[00:05:08] So at least for now we have an inflationary situation with underemployment and that's different from the eighties. So for that reason, that one reason, our first reason, anyway, I think it's a little bit different this time than last time.

[00:05:21] Number two, hopefully the powers that be, learned from what happened in the eighties so that they can be more measured this time, and more informed. You know, history is such a good teacher painful, but good. And I'm really counting on the federal reserve, our government the economic people. I really, really hope that they use that information to plan better this time to maybe not be so heavy handed so late. This is just, again, my personal opinion, because again, I'm not a financial expert, I'm just a real estate person.

[00:05:56] I'm older. I watch a lot of what's going on. I read a lot, I study, but this is still my opinion is that too little too late means you have to be way more heavy handed. And I'm really, really hoping that the people that that are in Washington and the economic folks are being more careful. And the federal reserve will be more measured and won't let it get so out of hand, learning from experience can be great if you actually learn, right? So cross your fingers.

[00:06:26] I know somebody will laugh at me. They go, you can't bank on them. It's like, well, I just you know, positive outlook. I'm hoping, I'm hoping that they read what happened and, and do better this time. So that's that's our number two.

[00:06:38] And number three is really about using investments and assets as hedges against inflation. And that means that you might put your money into something that is, that does well during inflationary times. And so real estate is one of those things, but I want to back up a little bit back up the truck a little bit because in general Americans like investing in real estate, even when there's not a crisis.

[00:07:04] And we've got a great chart from KCM, keeping current matters. One of my favorite. Websites. And they published the results of a Gallup poll that said in, you know, even in regular times, Americans much prefer investing in real estate, even over the stock market. So I would have bet the other way around, you know, you watch the financial news and all that you'd think, wow, everybody with me is investing in the stock market.

[00:07:30] So but no, actually the opposite is true. So then you add an inflationary time and you see people moving their money into, what are they buying? They're buying metals like gold and silver. There are people buying Bitcoin, but that's like a completely different podcast. And we won't talk about it because it is coming to real estate. So stay tuned for that.

[00:07:48] But in the meantime assets that appreciate during inflationary times artwork classic cars, real estate, gold, silver, stuff like that. So you might see people start taking their money out of some investments and start putting it into real estate or some of these other kinds of investments. Because they're betting that they're going to go up in value during this time of inflation.

[00:08:14] And I find that very interesting because I am starting to get the occasional phone call the last week or so I'm dissolving my, whatever my money is in the stock market mutual fund. I'm taking it out and I'm going to buy houses and I want to buyapartment buildings. My family and I are going to buy a ranch and a condo.

[00:08:35] You know, it's like, they're, they're just starting to move their money around. So I'm wondering if this is going to start happening a little bit more. If we might see some bigger moves out of the stock market and out of some other investment kinds of investments and into real estate.

[00:08:50] And that would be that would be really interesting, I think with we've had so many housing shortages lately, and if we get more people wanting real estate, I mean, yes, we do have a lot more listings coming on than we did, but I wonder if the demand unexpectedly goes up because it's reacting to things that are happening in the financial markets, either nationally or worldwide.

[00:09:15] If that happens, then we might've had a normalizing market, but then we had this other group of investors going into real estate where they normally would not have, what's that gonna do to the housing supply? Well, we'll just have to see, but in the meantime, It's interesting that real estate, first of all, is the preferred investment even in non-crisis times and that it may become in higher demand during the next few years, if the inflation thing keeps spiraling up. If it goes down the, the money the inflation starts going down and we get a handle on, at least it slows down, then we'll that many go back out of real estate and into the other markets.

[00:10:00] So it's all very interesting and it's it's scary and exhilarating at the same time, especially for those of us remember, oh, the hardship of the eighties. Oh my gosh. It was just hard. But things did get better. So I want to leave on a happy note so if you want to talk about using real estate in your investment portfolio, if you want to just buy something and you've never owned real estate before, let's, let's talk about that, especially while the interest rates are still somewhat low.

[00:10:28] We don't really know how high they're going to go over the next few years. We know how this year supposedly going to go. As long as the federal reserve bank doesn't change their mind again, because they do do that sometimes.

[00:10:39] But yeah, so let's, let's definitely chat. And if you want to give me a jingle, give me a text. My number is 541-301-7980 we can always have a conversation. We can talk about dissolving some of the real estate you have now and moving it into a different kind of real estate. We have people doing that, but moving it into a different area, different part of the country. We have people buying in Europe, they're taking their, their real estate assets out of the United States and into other countries.

[00:11:09] That's a, we should do a podcast on that. That's a real interesting thing. Maybe we'll have some of my, my friends who have done that, come on the podcast and talk about talking about what that was like, but, but anyway yeah, just give me a call, give me a text, let me know what I can do to help in the meantime, have a beautiful weekend and we'll catch you next week.

[00:11:26] Bye now.