ASK COREY
Q: Corey, what is the effect of stagflation on housing demand?
A: Thank you for your question. Demand is connected to supply and price. Stagflation is a combination of economic stagnation and price inflation, both of which place downward pressure on demand. Housing demand therefore is very strongly affected negatively by stagflation. Stagflation destroys demand for housing. The results is that prices go up while the number of buyers goes down. Home values and rents increase while fewer people can afford them. More money circulates, which fools some people into believing that they have the same or more money, while their purchasing power actually decreases. For real estate, this means fewer transactions, larger dollar amount, yet less real compensation for real estate professionals and investors, and less real investment in the real estate sector. The silver lining in this cloud benefits real estate companies and investors who already have more assets, those who best implement newer technologies and those who are in a position to take advantage of other major changes in the economy, including those with highly trained, efficient teamwork and workflow systems. As the worst overall economic situation, stagflation fools the general public by flooding the system with more money, yet providing even less purchasing power. Stagflation tends to initially benefit the government and the wealthy while taking away from the middle class.
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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.