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That completely ignores the downward pressure on home prices that a high interest rate has. Inflation at 7% would be tied to significantly higher interest rates
by djrogers 9y ago
That completely ignores the downward pressure on home prices that a high interest rate has. Inflation at 7% would be tied to significantly higher interest rates, which would reduce the buying power of potential buyers, which reduces home prices.
Leaving aside all the mechanics of timing the market such that you have a huge, low interest, fixed rate mortgage in hand when inflation magically jumps to 7%.
- harry8 9y agoThe first line says precisely this is the assumption. The second declares the example about to be relayed to demonstrate the effect of unanticipated inflation as a "stupid example." Sorry that wasn't clear enough for you. Yes anytime you invest in an asset that is a total loser financing working for you or against you is a case of "how bad you lose."