Home prices and inflation

[Elwar]

Ok, I keep seeing people saying that there's going to be hyperinflation, and yet that the home prices are not going to also go up.

This seems counterintuitive. In Zimbabwe the home prices shot up, in one example I saw the home prices actually went up faster than gold prices.

Why would the same not happen here?

And if home prices do go up, since we are a consumer economy, why would inflation not be controlled considering when home prices go up people take lines of credit out on their overpriced house and start spending...thus boosting the economy.

I'm hedging my bets on inflation, I just purchased a house beyond what I would've ever purchased before but if $300k is the cost of a loaf of bread in a few years, then I could just give my bank a loaf of bread and own my home outright.

Though, either way, I purchased the home looking at staying there forever so I'm not too worried about what it will be worth in a few years since I don't plan on selling anytime soon (and fortunately Florida has a 3% cap on increases in property appraisals for homesteaded homes per year).

[theoakman]

eventually it will. But when inflation comes, the last thing to rise is your income. Home prices won't rise until income rises even more. In the beginning stages of it, you'll still see housing going down because your paycheck won't be able to go towards your mortgage payment. It will be going to your food bill and your gas bills.

[Josh_LA]

Ok, I keep seeing people saying that there's going to be hyperinflation, and yet that the home prices are not going to also go up.

This seems counterintuitive.

Counterintuitive? maybe because it's wrong!

Right now it's deflation, but IF we have hyperinflation, housing prices won't be the main concern

[brandon]

Inflation causes the price of everything to go up. Food, gas, gold, houses, stocks, income, etc.

People with savings in dollars before the inflation will be hurt. People receiving monthly annuity payments will be hurt. People receiving a set pension will be hurt. etc

However, someone who has no savings and is still working will not be hurt that much.

In hyperinflation, everyone is hurt. Not only is savings completely wiped out, but the dollar becomes an unacceptable means of payment virtually everywhere. Employers cannot hire employees because they only have dollars to pay them with. We cannot trade with the world because they dont want our dollars. Basically everyone who owns metals becomes a millionaire and everyone else becomes dirt poor.

[Jordan]

Inflation causes the price of everything to go up. Food, gas, gold, houses, stocks, income, etc.

People with savings in dollars before the inflation will be hurt. People receiving monthly annuity payments will be hurt. People receiving a set pension will be hurt. etc

However, someone who has no savings and is still working will not be hurt that much.

In hyperinflation, everyone is hurt. Not only is savings completely wiped out, but the dollar becomes an unacceptable means of payment virtually everywhere. Employers cannot hire employees because they only have dollars to pay them with. We cannot trade with the world because they dont want our dollars. Basically everyone who owns metals becomes a millionaire and everyone else becomes dirt poor.

+1

We'll never know when hyperinflation will kick in, I don't think it will happen slowly.

[ArchPaul]

The only theory I could think where home prices would remain level or not adjust up with inflation is over supply, and continuing over supply. I.e. current inventory + unemployed inventory + future (alt-a and subprime inventory) + a mass foreclosure rate due to hyperinflation (you want to eat before you pay bills and with commodities as much as a house payment, if not more, your going to let the house go).
But, I have reservations it would happen. The value of the dollar would decrease (increase supply) faster than the supply could get on the market... in generic terms, its a supply relative equation, how fast can the supply of homes increase vs. the supply of dollars?

[The_Orlonater]

Counterintuitive? maybe because it's wrong!

Right now it's deflation, but IF we have hyperinflation, housing prices won't be the main concern

Price deflation.