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I guarantee the average home buyer does not know that houses are a hedge against inflation. There's a good chance the average home buyer doesn't even know what

I guarantee the average home buyer does not know that houses are a hedge against inflation. There's a good chance the average home buyer doesn't even know what hedge means in that context.

c7DJTLrn 5y ago
BlackRock might skew the average there.
- SomewhatLikely 5y ago
  https://awealthofcommonsense.com/2021/06/is-blackrock-buying-too-many-houses/ https://awealthofcommonsense.com/2021/06/is-blackrock-buying... BlackRock owns around $60 billion in real estate assets. The value of the housing market in the United States is more like $36 trillion.
  - Guest42 5y ago
    Given when they started, I imagine they’ve bid on a fairly high percentage of the sales in the last 5 years and had an impact on the prices and perceived value of the housing market.
gedy 5y ago
They know houses "always go up" and "a good investment", which is another way of saying the same thing.
- throwawayboise 5y ago
  Anyone who was in the market in 2008 knows that houses don't always go up. Over the long term, it's a pretty safe bet that they do, but it's not always a smooth ride. And there are still neighborhoods that are in decline. Opportunity to get in before they gentrify? Maybe, but it's a gamble.
EpicEng 5y ago
Yet, how does the fed fight inflation? By raising rates, i.e., home prices will be dropping. By how much, no idea, but sure reeks of bubble territory. Of course the loan itself is worth less to the bank during inflationary times. You make more money, your payment stays the same, and real estate prices will rise somewhat, but it's not as simple as you make it seem. I'd be worried if I were planning to sell within the next few years.
jollybean 5y ago
I don't think they know what 'hedge' means, but they understand the concept that the value of the money may be going down. That said, it's probably not a driving sentiment, rather, just the basic overall impetus of inflation and low rates. It could be that there are whispers of increasing rates and everyone is looking to lock in. That said, in around 2006, this was the feeling as well. The major crash. And as soon as things were getting frothy again - COVID and major turmoil. Finally, it should be noted, that there are external factors driving inflation, if even some of it is temporary, which is cost of transport, and supply chain issues in China, and of course, tarriffs. That said, Fed probably needs to raise rates.
mortenjorck 5y ago
The average homebuyer is also only putting 5.3% down [1], so even if they know what hedging is, they’re not exactly moving significant amounts of capital around. [1] https://www.housingwire.com/articles/49443-the-average-down-payment-is-much-smaller-than-you-think/ https://www.housingwire.com/articles/49443-the-average-down-...

I guarantee the average home buyer does not know that houses are a hedge against inflation. There's a good chance the average home buyer doesn't even know what hedge means in that context.

c7DJTLrn 5y ago

BlackRock might skew the average there.

SomewhatLikely 5y ago
https://awealthofcommonsense.com/2021/06/is-blackrock-buying-too-many-houses/ https://awealthofcommonsense.com/2021/06/is-blackrock-buying... BlackRock owns around $60 billion in real estate assets. The value of the housing market in the United States is more like $36 trillion.
- Guest42 5y ago
  Given when they started, I imagine they’ve bid on a fairly high percentage of the sales in the last 5 years and had an impact on the prices and perceived value of the housing market.

gedy 5y ago

They know houses "always go up" and "a good investment", which is another way of saying the same thing.

throwawayboise 5y ago
Anyone who was in the market in 2008 knows that houses don't always go up. Over the long term, it's a pretty safe bet that they do, but it's not always a smooth ride. And there are still neighborhoods that are in decline. Opportunity to get in before they gentrify? Maybe, but it's a gamble.

EpicEng 5y ago

Yet, how does the fed fight inflation? By raising rates, i.e., home prices will be dropping. By how much, no idea, but sure reeks of bubble territory. Of course the loan itself is worth less to the bank during inflationary times. You make more money, your payment stays the same, and real estate prices will rise somewhat, but it's not as simple as you make it seem. I'd be worried if I were planning to sell within the next few years.

jollybean 5y ago

I don't think they know what 'hedge' means, but they understand the concept that the value of the money may be going down. That said, it's probably not a driving sentiment, rather, just the basic overall impetus of inflation and low rates. It could be that there are whispers of increasing rates and everyone is looking to lock in. That said, in around 2006, this was the feeling as well. The major crash. And as soon as things were getting frothy again - COVID and major turmoil. Finally, it should be noted, that there are external factors driving inflation, if even some of it is temporary, which is cost of transport, and supply chain issues in China, and of course, tarriffs. That said, Fed probably needs to raise rates.

mortenjorck 5y ago

The average homebuyer is also only putting 5.3% down [1], so even if they know what hedging is, they’re not exactly moving significant amounts of capital around. [1] https://www.housingwire.com/articles/49443-the-average-down-payment-is-much-smaller-than-you-think/ https://www.housingwire.com/articles/49443-the-average-down-...