Foreclosure Lesson #2 - National Factors - Inflation

Alright, we have looked at interest rates and how they affect your purchasing power, now we will look the the second Nation Factor that affects foreclosures and Real Estate in general. It is important to know all the factors before making any decision to buy, whether it is a foreclosure or any other home. The second National Factor is Inflation.

Inflation is defined by wikipedia as a rise in the general nominal level of prices over time. Inflation is is measured as the percentage rate of change of a price index. The governments main gauge of inflation is the Consumer Price Index.

Basically, inflation tends to follow the supply and demand curve, although it isn’t affected by any single factor. Inflation causes prices to rise - whether its a pair of jeans at American Eagle, or the house you want to buy. The higher the inflation, the less your money will buy.

Without getting really technical about inflation, the thing to realize here is this: Whenever inflation changes moderately up or down, investing in Real Estate is good. Classic case of when to buy and when to sell. If inflation goes down, you want to buy. If inflation goes up, you will want to sell. Pay attention to inflation and figure out where we are in as a nation with inflation. You can look at http://www.inflationdata.com/inflation/ or you can call most mortgage brokers and they will have a good handle on current inflation patterns.

Rob Alley
Roy Wheeler Realty Co. - The Avery Group
http://www.robsellscharlottesville.com
roballey@roywheeler.com

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