Is Inflation Good Or Bad?
Inflation is a term that often has a negative connotation for stock market beginners. We hear the word and it makes us shudder. No one wants to pay more today for a product that we bought yesterday for a lower price. However, inflation is not always bad. In real estate, inflation can increase the value of our home while we pay the same mortgage payment.
This example shows how inflation can be helpful.
Bob and Marie bought their first home in 1989 for fifty four thousand dollars. The home payment, which includes the insurance premium and the taxes, were four hundred dollars each month.
In 2006, the home was appraised at two hundred ten thousand dollars. Due to increases in taxes and insurance the payment for the home had increased to five hundred ten dollars.
In this case, inflation has been helpful to Rob and Mary. Their home is now worth more than when they bought it and the home payment has not made a significant increase.
Recently, Rob and Mary had their home reappraised. Due to the economic conditions in the United State of late the home is now only worth one hundred fifteen thousand dollars. Their house payment remains exactly the same as it was in 2006, but the home has lost almost half of its value form 2006. The lack of inflation has caused Rob and Mary to lose net worth. Unless the economy turns around and we begin to have some inflation once again, their property will continue to lose value.
No one wants to see runaway inflation. That means that we will be paying more at the store for our food and other necessities of life. However, we all depend on some inflation in order for our lives to flow smoothly.
While we do not want runaway inflation, we do need balanced in inflation. That means that the price of goods will grow slowly along with take home pay and property values. - 23223
This example shows how inflation can be helpful.
Bob and Marie bought their first home in 1989 for fifty four thousand dollars. The home payment, which includes the insurance premium and the taxes, were four hundred dollars each month.
In 2006, the home was appraised at two hundred ten thousand dollars. Due to increases in taxes and insurance the payment for the home had increased to five hundred ten dollars.
In this case, inflation has been helpful to Rob and Mary. Their home is now worth more than when they bought it and the home payment has not made a significant increase.
Recently, Rob and Mary had their home reappraised. Due to the economic conditions in the United State of late the home is now only worth one hundred fifteen thousand dollars. Their house payment remains exactly the same as it was in 2006, but the home has lost almost half of its value form 2006. The lack of inflation has caused Rob and Mary to lose net worth. Unless the economy turns around and we begin to have some inflation once again, their property will continue to lose value.
No one wants to see runaway inflation. That means that we will be paying more at the store for our food and other necessities of life. However, we all depend on some inflation in order for our lives to flow smoothly.
While we do not want runaway inflation, we do need balanced in inflation. That means that the price of goods will grow slowly along with take home pay and property values. - 23223
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posted by X - Men @ 5:19 AM
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