H I GHER PR I CED GOODS AND SERVI CES TEND TO CAUSE THE PR I CES OF HOMES TO R I SE AS WELL .
though. Believe it or not, the pandemic has caused demand for goods and services to fall slightly, and the current inflation rate sits around a low 1.4%. For reference, the United States Federal Reserve typically sets the annual inflation goal at 2%, which is considered to be in that “healthy” range mentioned earlier. At this point, you may be wondering why utilize multifamily investments as a hedge against inflation when inflation poses no immediate risk. Well, as it turns out, the Fed has taken all of the stress that the pandemic has placed on the economy into consideration, and has since updated its policy to allow inflation to surpass the healthy 2% threshold. That’s why many of the more financially savvy folks who invest seek to diversify their portfolios with investments that hedge against the effects of inflation. While Hollywood may make it seem as though the stock market is
all there is to investing, the truth is that both commercial and residential real estate are not only just as popular, but can oftentimes be more solid acquisitions to make, with multifamily having a slight edge in terms of peace of mind than your typical residential plot. Ready to hear the good news about inflation? Historically speaking, periods of inflation are actually a benefit for multifamily investors. Since multifamily properties are real, physical assets, the value of a property is determined by its condition, any improvements made, and rental potential - all of which are completely unfettered by the ups and downs that plague any stock or bond. More importantly, while most goods or services can be willingly given up in times of economic distress, people will always need to have a place to live. This ensures that multifamily properties will not only stay afloat in even the worst of
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