Apartment Prices WILL Increase During Times of High Inflation

If it rose in pace with inflation, then they didn't actually increase in value.

If it rose faster than inflation, than the inflation had nothing to do with the value increase - It just makes pretty graphs.

A year into a bad recession and good old Alpine292 is still begging people to believe him that "prices are going UP!" Nevermind that every economic indicator on the planet is saying otherwise. Nevermind that any 3 year old who can access this site can view stats that clearly point out anyone claiming that is a moron.

Alpine292, you are a complete buffoon and an ignoramus. I thought you were moving to DC, why are you still here bothering everyone with your nonesense posts??? PLEASE, DO US ALL A FAVOR AND MOVE ALREADY.

Values do not equal prices.

Sorry, but the only way real estate PRICES will inflate alongside currency inflation is if wages inflated in lock-step. Ain't gonna happen.

"If it rose in pace with inflation, then they didn't actually increase in value."

BINGO! Dont bother responding to Alpine he has no grasp of anything, let alone finance or real estate.

alpine, what happens to nominal interest rates when inflation goes up?

Who cares? During inflation prices don't actually rise - currency falls in value because it is no longer scarce. Incomes rise (usually drive) inflation.

If you're listening to Jim Rogers you may want to reconsider. His recent prognostications have been 100% wrong.

Unemployment was DECLINING in the late '70s.

http://4.bp.blogspot.com/_pMscxxELHEg/SikRtcwvdII/AAAAAAAAFcg/rkDiquH8wUM/s1600-h/EmploymentMeasureMay09.jpg

Interest rate increases will kill property value increases unless the inflation is so rampant that incomes are skyrocketing as well. Those higher interest rates will cause affordability levels to drop. Not to mention the fact that the very reasons we reached the previous levels (loose mortgages, free money, increasing values, high 401ks, etc.) are gone.

Actually, real estate prices will FALL in times of high inflation (such as the early 80's). The reason is twofold: high interest rates lower the affordability of housing; and banks are reluctant to lend in high inflation environments, as the value of the principal falls.

Ergo, alpie, watch what you ask for. CD's and other financial assets are great things to buy during high inflationary periods, but real assets are not.

Actually, they could rise or fall. If the economy is growing briskly despite high inflation, this has been true many times and in many places. The real estate bubble of the 70s in California prove this, as did Moscow in the earlier part of this decade. Like anything it depends on supply and demand.

Lots of inflation will cause real estate to decline.

Where are the buyers going to get their money. All the jobs lost, I do not know too many people are making more money now than they did 2 years ago. Oooh inflation also means higher interest rate. Less money made and higher borrowing cost....I think even our resident Retard Alpine can figure this one out!

alpine292, I just love when you get all excited about posting some idiotic response to an article that somebody had to read to you (b/c you obviously lack the basics of English), that you spell all kinds of words wrong%u2026 LOL, dude, just sound them out next time b/f you type. Or, at the very least, have your babysitter spell-check. Either way, I look forward to your posts on the daily.

i wonder, did real estate in NYC go up 150% in the 10 years prior to the inflation in the 70s? Well it did this time. Always know where you came from.

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Its worth comparing not only the amount of price gains but also the timing. Peak was 1969. Bottom in 73 around the time inflation starts kicking in. Prices start moving up again in 76 about the time the economy starts moving. Even if we had the same gains and everything else moved the same way, we would be looking for a bottom next year and prices going up again in 2014. As urbandigs points out, it might move more slowly this time based upon the amount of damage done or the size of a possible overcorrection.

Alpie - you're funny:

"Although this market has had its ups and downs since then, it has flourished in recent years. From
1976 until the end of 1979, co-op prices tripled and the number of co-op apartments increased sharply.
Almost all the "new" co-ops have been converted from rental apartment buildings."

It then goes on to say:

"Co-op conversions thus far have been concentrated in relatlvely well-to-do neighborhoods, especially in Manhattan, wlth the newer and more desirable buildings converting first."

It further says:

"Although publicly assisted cooperative units have outnumbered private units for a long time, the gap narrowed noticeably during the 1970s In 1975, the earliest year for which detailed data are available, there were roughly 83,000 publicly assisted cooperative units and about 60,000 private cooperative apartments In the City, some 52,000 of which had been converted from rental units. Of the 35,000 "new" cooperative units added from 1970 to 1975, conversions accounted for about 16,000 Units, while another 16,000 Units comprised a single publicly assisted housing project."

SO there you have it. Prices did NOT triple - you had conversion of rental units into co-ops starting with the most expensive ones first, offsetting the initial inventory flooded with publicly-assisted co-op units.

Rentals are definitely coming down, way down...The Helena on west 57th street, doorman, gym, pool, etc. had studios listed at $2300..now $1744.

steve - how about later in the article,

"As inflation worsened during the mid-1970s, co-ops and other real estate became increasingly popular as hedges against inflation as well as for their tax advantages"

of course, this article was merely written by staff of the NY Fed in 1980 - I'm sure that your expertise as a translator trumps theirs.

steve - listen, its ok to admit for once in your life that you are wrong. your mommy and daddy will still love you, I'm sure.

printer, you're ignoring my earlier post. from the mid-1970s until about 1980 we had very robust employment GAINS. but i'm sure you'll find some way to explain how now with huge unemployment and employment deflation we'd manage to replicate those inflationary increases in housing prices.

"co-ops and other real estate became increasingly popular as hedges against inflation as well as for their tax advantages"

And so did insurance from AIG become a popular hedge. Doesn't mean it worked.

i just think we all need to for once acknowledge that maybe, just maybe, this crisis is unique in nature and the actions taken to stem a 2nd depression - well, no one really can just use a history book to predict the exact outcome. This is all new for all of us. It will be a lesson for all of us in the end.

acknowledged

Good luck holding cash in a hyper inflation scenario folks.
Competitive currency devaluation is here to stay.

In a hyper-inflation scenario good luck renting too.

"Unemployment was DECLINING in the late '70s."
Based on last month's claim numbers, unemployment should start trending up next month. Bingo, you'll have your declining unemployment.

actually steve, hedging credit exposure by buying protection from AIG worked quite well, thanks to Mr.Paulson. but that's a complete non-sequitur. the FACTS are quite clear - during the rampant inflation of the laye 70s, NYC co-op prices MORE than kept pace - unless you too know better than this quite comprehensive report written by the staff of the NY FED. To be bearish is one thing, pigheaded quite another.
Now, to UDs point - having accepted the fact that in our most recent bout of large inflation apt prices outpaced inflation, does that autmatically mean that IF we encounter those conditions again we will see the same result for apt prices? of course not - each day is a new one, but we should certainly look to history as a guide - after all, what happened to all those who proclaimed "this time its different" during the runup?

moronicho75: Your stupidity is astounding. How is it if fewer people are losing jobs, but even fewer are gaining them, that unemployment would decrease?

no jerkico, you didn't get my point. employment was increasing, not merely declining at a slower pace. good lord you're thick.

"i just think we all need to for once acknowledge that maybe, just maybe, this crisis is unique in nature and the actions taken to stem a 2nd depression - well, no one really can just use a history book to predict the exact outcome. This is all new for all of us. It will be a lesson for all of us in the end."

While I agree with you, I will still object to people using THAT as an argument that certain things which have happened with every single prior down cycle won't happen this time.

when was the last time that auto sales dropped this precipitously? when was the last time that he experienced the boom and bust of debt of this magnitude?

I think auto sales dropped considerbly during the fuel embargo.