Inflation severely damages the purchasing power of the dollar as we ’ ve all seen firsthand in recent years .
As of February 2022 , there was an estimated $ 10 trillion dollars ' worth of tappable equity in residential properties that owners can access by way of cashout loans , home equity lines of credit , and / or reverse mortgages with no required monthly payments . The average US homeowner who retires has approximately 83 % of their net worth tied up in home equity and pays their monthly expenses from just 17 % of their overall net worth found in savings , checking , and / or pension accounts .
The typical homeowner has the bulk of their individual or family net worth tied up in the equity in their primary residence where they live . It ’ s estimated that close to 37 % of all US households live in residential properties ( onetofour units ) that are free and clear with no mortgage debt . This number is approximately 5.5 % higher than 10 years ago .
For those Americans who are fortunate to own their own home , the massive equity gains over the past several years have likely more than offset their rising monthly living expenses . This is especially true in states like California where the median price home statewide reached close to $ 850,000 in March 2022 . Many homeowners gained more than $ 120,000 in new equity gains in 12 months or less .
Inflation severely damages the purchasing power of the dollar as we ’ ve all seen firsthand in recent years .
Equity Rich , Cash Poor
Rising Inflation
Inflation severely damages the purchasing power of the dollar as we ’ ve all seen firsthand in recent years . Many consumer product prices have risen as much as 10 % to 50 % over the past year alone , sadly .
Historically , real estate has proven to be an exceptional hedge against inflation as property values tend to rise right alongside or above published inflation rate numbers like a buoy with a rising tide . In March 2022 , the published annual inflation rate reached 8.5 %. This was the
By Rick Tobin
highest inflation rate in more than 40 years dating back to December 1981 .
Between December 1980 and December 1981 , the Federal Reserve raised the US Prime Rate to as high as 21.5 % for the most creditworthy borrowers and 30year fixed mortgage rates hovered in the 16 % to 17 %+ range in order to combat or quash those high inflation rates . Here in 2022 , the Federal Reserve will likely raise rates significantly yet again like back in the early 1980s in order to slow down these incredibly high inflation rates that are actually much higher than the published rates .
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