April 2022: Message from Our Broker
Veterans Elite Realty wouldn't be successful without the guiding hand of our broker, Kent Nelson. I am glad that I am part of his team. I hope you get something great from his message. Click here for Sarah's Sunny Snippets.
We are currently facing inflationary pressures we haven't seen in nearly fifty years. In the early 1970's, an oil cartel was created and successfully pushed prices of petroleum precipitously causing a global recession. Since oil was denoted in U.S. dollars, the U.S. government flooded the market with dollars pushing the value of the dollar down, in turn pushing the real prices of petroleum down, but also spurring double digit inflation. The free flow of money made at the mint did succeed in reducing the real price of oil-but it also unleashed a stagflation monster. During that decade of high inflation-home values increased every single year-ten straight years. Even when mortgage rates went up to 16-18%-home values increased. Even during the deep recession of the early 80's-home values increased every year. Home values form 1973-1982 increased as much as inflation and beat out the stock market by nearly 15%.
Is it any surprise that over 20% of all homes bough in Q-4 2021 were purchased by investors? And that estimates in the first quarter of 2022 are that over 30% of all buyers were Wall Street and other investors. What these billionaires and mandarin minding minions of trillions of dollars of investments are doing-is putting their money in homes-more than traditional stocks and bonds-and that they expect this inflation to be here for while. So what does that mean for us? It means that we may face some bumpy times ahead. Virtually every economist worth their salt it indicating that they expect a recession in the next few years. I'm hoping it's light and short. But it never hurts to be prepared.
I'm not a financial advisor, or an attorney, but one of the things I do during times like this is to take out a line of credit (not refinance) against my home-and then do NOTHING with it, I don't draw from it, nothing. Banks and lenders never lend money to people when they need money most. It's when you need it least- that it's easiest to access. Home value are up over 30% in the last two years-and that means you have equity in your home. It may be worth while to take a line of credit against your home as an insurance policy. That way, if anything does happen-you have instant access to cash to carry you over until the clouds clear and the sun shines again. Always good to be ready for a rainy day. But I wholly discourage using it for anything but URGENT NEEDS. Just a safety valve. No one can read the tea leaves of the future and of what may or may not happen-but it never hurts to be ready just in case. While I wasn't much of a boy scout as a kid-I was a scout master for a number of years as an adult-and the Scout motto is: Be Prepared. Not just a nice slogan for kid scouts-but for us adults as well.
In the meantime, enjoy life. Spend time with family and friends. Take time to smell the roses. Don't fear the future-embrace it. Don't survive-thrive. Those most prepared always feat least. It's a great time to be alive! Thank you for your service. God bless and Godspeed.
I just want to echo the sentiments of that last bit. Investors are always looking for the highest ROI (rate of return). What will give me the most return for what I put into it? I sincerely feel that the best ROIs for me have been the time I've invested in family, friends and community. After all, "all that glitters is not gold", not everything that looks precious turns out to be so, so keep what matters most close to you.