REAL ESTATE NEWS
Governments and countries spending more and more money while productivity decreases leads to higher consumer prices concurrent with diminished economic activity. This inflation with stagnation is called stagflation, and it certainly has an effect on real estate and most other industries. Overspending, radical Fed monetary policy, exploding social programs, pandemics and wars all contribute to the factors that cause stagflation. The U.S. dollar today is only worth about three cents as compared to its original value in 1792, when an entire typical large family of eight would likely be fed a big meal for under a buck. As proven by all fiat currencies throughout history, the U.S. Dollar will eventually be worth virtually nothing.
For real estate, stagflation has been playing out in historic high home prices, especially on the coasts, sunbelt, upscale neighborhoods and the cleaner, safer suburbs with good schools. Gritty urban centers like Downtown Los Angeles are seeing just the opposite, especially near homeless populations like Skid Row, where some condos like Little Tokyo Lofts are seeing some historically very low prices. One unit, a nice Little Tokyo Loft with a balcony was recently lowered to just $355,000 yet did not receive one offer. Other lofts, especially lofts with views, are doing quite well, and growing. Nice new condos in the safest neighborhoods, such as 388 Cordova in Pasadena, have no problem selling fast for around $1 million.
Now that the virus panic is subsiding, and many small businesses are still struggling or permanently closed, most areas of real estate are seeing some cooling, but the average home price is not dropping. Low interest rates and inflation are now the main driver of pricing economics. Unfortunately, inflation can only give a false veneer of growth. A dollar that is falling in value cannot grow anything except higher costs, and perhaps some false perceptions of prosperity. Because good money drives out bad, the fall of the dollar coincides with dramatic 8.9 million percent rise of blockchain cryptocurrencies.
Gauges of future inflation are surging, as gold and bond prices shoot up, according to Bloomberg. Reported signs of economic recovery are unfortunately only a mirage, a false picture being painted by runaway inflation. GDP is dropping, stock prices are in a volatile spasm of tizzy, to be followed by an impending cycle of hopelessness. Consumer confidence has been slipping, business confidence has been declining, while most American home prices continue to rise. These contradicting realities of inflation — more money, more depression and more volatility — paint today’s picture of stagflation’s warping, distorting, destabilizing effect on home prices and the entire economy.
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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.