"INFLATION IS AS VIOLENT AS A MUGGER, AS FRIGHTENING AS AN ARMED ROBBER, AND AS DEADLY AS A HIT MAN." Ronald Reagan.
You may not describe the effects of inflation in those strong terms yourself. However the effects of inflation do affect your life, your home, your gas tank and your family wallet. And inflation is also the nemesis of Bonds and therefore home loan rates, because just like inflation erodes the value of the dollars you spend, inflation erodes the value of the fixed return a Bond provides. And last week, Bond pricing worsened on news of inflation, causing home loan rates to move higher by about .25% across the board and reaching the highest levels seen in weeks. According to one of my best loan sources Ed Varon at Pacifica Mortgage.
That will slow buyers down just a little more. And force the prices down a little more. Maybe make it a little more likely that there will be a change of party in power. Would that be the White House going from Republican to Democrat or in Congress going from Democrat to Republican? I will not make any wild bets on that horse race. LOL
But the loans and the Real Estate Market are not a laughing matter. Higher loan costs are not going to free up more funds for more absorption of the excess properties on the market. Auctions bring in those with a pocket full of cash looking for a steal.
So many properties in my zone have “In Escrow” and “Sold” signs in front of them that I know there are savvy Westside buyers their scooping up the next Renovation or Quality property knowing that they are getting a deal that is “worth it in the Long Run” Yep. Priced right it still moves on the Westside of LA.
But what about Income Property? Many investors are willing to transport their investment funds to any zip code to get the better ROI. Will they still compete so dearly for SoCal investment property?
I don't think the super high premium will hold out on many items. But the Strength of the Rent Roll of apartment buildings in Los Angeles is not something to make light of. It is a strong set of supports to the apartment building value of the Los Angeles region.
It is slow but sure for this Tortuga. But it is on a steady pace. It will surely beat that wild willy nilly rabbit in the stock market.
IMHO Keith Lambert
310-391-0821