Housing Market Bubble Vs. Inflation

[Kevin Fletcher]

I was doing some reading about the 2008 bubble burst of the real estate market in the book "The AfterShock Investor" by David Wiedmer. He explains the cause of the crash, which we should all know about anyway, but he claims that the the only reason the market has rebounded is because of QE (Quantitative Easing) aka Federal Reserve printing money and putting it back into circulation. This Solution just kicks the bucket down the road as they say and causes inflation to rise/speed. The more the Fed props up the economy this way, the worse it will be when it all comes crashing down.

So, that being said I have a few questions on what people think about this as it relates to Real Estate.

#1 Do you think the hyper-inflation will increase the value of real estate. I.E. if a loaf of bread will cost $15 dollars will my house also be worth 15x its current value (exaggeration of course)? or will the economy crash so bad that people wont have the jobs and income to pay for the houses, which will kill our market?

#2 Are any investors here planning for a swift economic downturn, as predicted by some forecasters? and If so, How are you planning to model your business/investing strategy with this possibility in mind?

I'm very Interested to see what people think on this so please share your thoughts

[Walt Payne]

It seems to me there are two scenarios that one could plan for, each requiring dissimilar tactics. High inflation, which means having a high leverage ratio makes sense since you would then pay the mortgages off with cheap dollars. But ... if the economy tanks bad enough, you might have a hard time finding renters/buyers who can pay the bills, therefore so do you. In that case having minimal leverage means more security. How do you protect yourself from both possibilities?

I'm not sure what the answer is, and obviously the supposed economic gurus don't either or we wouldn't be in this mess. I do know that if I spent as much money over my income as the government has done that I would be in jail for fraud.