Today's Inflation vs. Depreciation in 2008

[Logan McKay Zylstra]

Inflation was just announced to be 8.5% (I think this figure is much higher). If we look at the last housing crash of 2008, we saw housing depreciate by 27% (differs depending on your source, I used statistics from the St. Louis FED), which didn't happen overnight and spanned about 4 years. If we divide this out houses depreciate by about 6.75%. 

If we look back to inflation of 8.5% last year, you are potentially losing more money last year than during the last downturn if you are holding onto cash.

While this isn't necessarily an issue for people who already have assets and are already wealthy, as their assets increased in value along with inflation. However, this proves to be a huge issue for the average American. Not only are they making less money than the year before if they didn't get at least an 8.5% raise this year (many didn't), but the bigger issue is that assets, namely homes, are more unaffordable. Inflation will only continue and rents are and will follow.

While the FED, has been extremely aggressive in raising rates recently, the government printed so much money during the pandemic that inflation is still inevitable. If you are waiting for the next downturn, stop. Take action today to get into your first home or investment property. If you keep waiting, things will only continue to be more unaffordable for the foreseeable future.