Have you been waiting for the market to crash before you pull the trigger on your new home? If so, I’ve got great news for you. Now is your time to buy.
What? I know what you are thinking…..”John, you are crazy, these prices haven’t changed much at all!?!?”
Well dude, it’s time to stop thinking about prices and to start thinking about value.
The price of something is the number of dollar bills you must pay.
The value has to do with what those dollar bills are worth adjusted to inflation.
Inflation is a dirty word we are reading a lot about and is making us spend more of our dollars because it takes more to buy the same things it did a couple of years ago. If you think of inflation as prices on stuff going up, you’re sort looking at it wrong. That is a consequence of inflation. Inflation is really the devaluation of a dollar, which is why it takes more dollars to buy the same stuff. If we have 7% inflation this year, what that really means is the value of today’s dollar is 93 cents compared to last year so the price of everything will go up accordingly.
Now let’s apply this to houses.
Prices in the bluegrass area are about flat for this year….meaning they haven’t really gone up. Meanwhile inflation has made last year’s dollar worth about 93 cents. So inflation has devalued the dollar causing everything you buy to cost more dollars EXCEPT for real estate. If the price of something didn’t go up during an inflationary time, that really means that adjusted to inflation, the value dropped. So you don’t have to go back and read that again, I’m saying even though the price of a house is about the same as last year, it is really worth less today adjusted to inflation.
So, go out and buy today. Everything is effectively 7% cheaper than it was last year.