3 trillion dollar printed in 2020 so far - effect on house price

[David Song]

Just checked the total US money in circulation M2, increased from 15.5 trillion end of 2019 to about 18.4 trillion, roughly 20% in the first 5 month of 2020.

Theoretically and historically, M2 is directly correlated with real estate price.

Would there be another dramatic jump in housing price in the next few years?

[Lumi Ispas]

@David Song, I grew up in Romania, a country that printed money after our Revolution in 1989, a country that had no jobs, and I'll always remember one instance. At the Revolution, my parents had enough money saved to buy a brand new car. They kept it in the bank not knowing what to do with them. At the same time, the government allowed everyone to buy from them the condo units we were living in. Some people chose to do it, some didn't. Luckily, my parents went to the bank, took a 100% loan which was allowed at that time, and started paying a mortgage.

Five years later, with the money saved in the bank for the car that we didn't use, all we could buy was a bicycle, while our mortgage payment and mortgage loan was a joke, as we used the same amount of mortgage payment from 5 years past to go to the grocery store and buy a loaf of bread, and my parents paid off the mortgage in full with one month salary, that's how much the money got devalorized. 

My parents lost their life savings from the bank to inflation, however, they gained a home as they were smart to take a mortgage. I look around at who created huge fortunes in those years, and it was the people that took loans to buy as much real estate as they could, and they took business loans to open up businesses and buy commercial properties. Generational wealth was treated by those people that took loans.

When I came to the USA 20 years ago I started researching and learning about Real Estate, and with the exception of my portfolio from 2007, everything else I buy with plenty of cash flow. Historically, Real Estate prices have doubled in value every 10 years, and with the inflation coming in 3-5 years, that price increase I thought I won't see it in a long time again - I can see it easily doubling again. When I visited Hong Kong a few years ago, a place of some of the highest real estate values in the World, I could see the size of their apartments and how the price keeps going up, and I can share that is happening in Chicago. We are having smaller and smaller apartments getting built and the price is higher per sqft than anything I've seen before. 

Inflation is coming in 3-5 years. My personal advice is to take all the mortgages you can take at the existing low interests, make sure you have plenty of cash flow, and go ahead and live your life. You'll wake up one day very wealthy. 

And you know what is the worse thing that can happen to you? If we all make a mistake, and prices don't go up that much, or not at all, the tenants have paid off your mortgages, you've enjoyed the cash flow and the depreciation and lived a really good life.