Because of irrational, unscientific COVID-19 policies that caused temporary increased demand for housing (as urban inner cities emptied), home prices have skyrocketed over the last 18 months. Since housing is the most interest rate-sensitive part of the U.S. economy, the repercussions of future escalating interest rate hikes -which will also cause housing prices to decline.
Interest rates and inflation move in very long, approximately 20- to 30-year, trends. Our country has never seen a 0% short-term interest rate – until the latest crisis in the 2008-2009 recession – and then again during COVID-19. As we bounce off current incredibly low interest levels, we project that rates will go well into the teens over the decades to come. Over the next three to five years, we would anticipate more than a doubling of current 15 to 30 year fixed mortgage rates. These increased rates WILL negatively impact home values.
It’s important that you consider whether your investment property portfolio is too high a percentage of your assets/net worth and whether this could impair your ability to preserve your net worth – or impair an orderly estate settling after your death. It’s also important that you understand the effect of potential future changes in our tax laws that could immediately diminish the value of real estate property. If you’d like to talk about this, please contact us at (859-223-6333 or email@example.com.
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