{"id":22085,"date":"2023-06-21T11:11:00","date_gmt":"2023-06-21T18:11:00","guid":{"rendered":"https:\/\/www.roryc.ca\/blog\/?p=22085"},"modified":"2023-06-06T15:02:50","modified_gmt":"2023-06-06T22:02:50","slug":"investor-buying-vs-investor-selling-affects-by-inflation","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/","title":{"rendered":"Investor Buying vs. Investor Selling Affects by Inflation"},"content":{"rendered":"<p style=\"text-align: justify;\">With most consumer products, the price increases as the quality or features improve with each new subsequent model. Any real estate investor can tell you that real estate does not follow this consumer product trend.<\/p>\n<p style=\"text-align: justify;\">Why is that?, you may be asking. It\u2019s due to inflation.<\/p>\n<p style=\"text-align: justify;\"><strong>Free for All &#8230;.. or just for Some?<\/strong><\/p>\n<p style=\"text-align: justify;\">Real estate is an element of our free market system which is driven almost entirely by supply and demand. When supply, otherwise known as the inventory of units on the market goes up, prices go down. When demand exceeds supply, the price per unit goes up. It\u2019s for this reason that a house can sell for price A one year, and that same house without so much as a lick of paint changed on it 365 days later can sell for a substantially higher price.<\/p>\n<p style=\"text-align: justify;\">From an investor\u2019s perspective, this means that with the right recipe of agility, liquidity, and impeccable timing, the market can provide some low-hanging and highly lucrative fruit. For an investor to gain from this though, someone else must lose, and often, it\u2019s their home that the individual is losing.<\/p>\n<p style=\"text-align: justify;\">Barak Obama\u2018s Former US Secretary of Housing and Urban Development is quoted as saying the following about the free market system, \u201cWe know that in our free market economy that some will prosper more than others. What we don\u2019t accept is that some folks won\u2019t even get a chance. \u201c. That, in a nutshell, is the major criticism of a free market or capitalist system.<\/p>\n<p style=\"text-align: justify;\"><strong>What is Inflation?<\/strong><\/p>\n<p style=\"text-align: justify;\">According to Merriam-Webster dictionary\u2019s definition, the term inflation is \u201ca continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services\u201d.<\/p>\n<p style=\"text-align: justify;\">If that left you scratching your head, then you\u2019re not alone. Let\u2019s turn to American Economist and Humourist, Sam Ewing. He famously described inflation as &#8220;Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.\u201c<\/p>\n<p style=\"text-align: justify;\"><strong>Do We Have a Type?<\/strong><\/p>\n<p style=\"text-align: justify;\">Although some economists feel that there are more types of inflation, for the most part, all seem to agree on the following three primary classifications: Cost-push inflation, built-in inflation and demand-pull inflation.<\/p>\n<p style=\"text-align: justify;\"><strong>Is Inflation a Good Thing or a Bad Thing for Investors?<\/strong><\/p>\n<p style=\"text-align: justify;\">Many consider real estate to be a shield to investors during inflation. As evidence to support that position, people cite inflation&#8217;s typically higher rental prices and increased influx of demand as folks move from being able to afford an entry-level home to having to go back to renting. The reality is it\u2019s not that simple.<\/p>\n<p style=\"text-align: justify;\">While it would be nice if there was a clear-cut answer to the question of whether inflation is a good or bad thing for investors, unfortunately, you\u2018ll have to settle for the frustratingly tepid answer of \u201cIt depends\u201c.<\/p>\n<p style=\"text-align: justify;\">As lukewarm as &#8220;it depends\u201c is as an answer, it does truly depend.<\/p>\n<p style=\"text-align: justify;\"><strong>Investor Buying versus Investor Selling<\/strong><\/p>\n<p style=\"text-align: justify;\">If you\u2019re an investor who is buying during a time of inflation, the market conditions can be unforgiving. Along with a stark increase in housing prices, the shortage of supply on the market is increasing the competition.<\/p>\n<p style=\"text-align: justify;\">If you\u2019re working with a lender, inflation can make it difficult to project an asset\u2019s profitability. This is because of undetermined variables such as whether the cost of lending will increase in the future, and if so, by how much. Without that information, investors may be challenged when calculating the impact of repayments and cash flow. The last thing you want after spending so much money on a property is to see it lose value because of inflation!<\/p>\n<p style=\"text-align: justify;\">However, inflation is also beneficial to investor-sellers looking to offload a property in the form of increased equity. As inflation drives up prices, the value of the asset increases, as well. This means that savvy investors can sell part or all of their real estate portfolio for more money than was paid for it, resulting in higher equity.<\/p>\n<p style=\"text-align: justify;\">While it may seem very enticing to sell while prices are high, this also means if you don\u2019t have somewhere to move to, you will also have to buy high. For many people who are able to transfer substantial amounts of equity, this can equal out, for some, this does mean significantly increasing costs.<\/p>\n<p style=\"text-align: justify;\"><strong>In conclusion<\/strong><\/p>\n<p style=\"text-align: justify;\">The upheaval in global financial markets, its boomerang effect on local real estate markets and the profound impact on people in the past year have created palpable stress for Canadians.<\/p>\n<p style=\"text-align: justify;\">Forces such as increased market volatility, supply chain issues resulting in lower inventory, geopolitical discord, higher inflation and tighter monetary policies have struck a negative chord, perhaps even discording markets in 2022 and the first quarter of 2023.<\/p>\n<p style=\"text-align: justify;\">While the root cause may vary, many of these forces are not new. We\u2019ve withstood them before. For example, we\u2018ve never experienced supply chain issues caused by a global pandemic in our lifetimes before, but our young nation experienced supply chain issues in the form of rationing coming out of World War I and II.<\/p>\n<p style=\"text-align: justify;\">Early predictions showed that Canadian inflation was on the road to recovery and we would soon be back to economic platitudes. It looks like we as Canadians may have to hold our collective breath a little bit longer as the Bank of Canada has most recently expressed some reservations. The only thing that\u2019s certain is that the path forward is clouded in uncertainty. Now is the time to look in the economic history books to leverage lessons learned from the past to prepare for what comes next.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.canadianrealestatemagazine.ca\/news\/how-inflation-affects-canadian-real-estate-investments-335374.aspx\" target=\"_blank\" rel=\"noopener\">How Inflation Affects Canadian Real Estate Investments?<\/a> by Heather McDowell | Canadian Real Estate Wealth<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With most consumer products, the price increases as the quality or features improve with each new subsequent model. Any real estate investor can tell you that real estate does not &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-22085","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Investor Buying vs. Investor Selling Affects by Inflation &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Investor Buying vs. Investor Selling Affects by Inflation &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"With most consumer products, the price increases as the quality or features improve with each new subsequent model. Any real estate investor can tell you that real estate does not &hellip; [read more]\" \/>\n<meta name=\"twitter:creator\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:site\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rory Clipsham\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/\"},\"author\":{\"name\":\"Rory Clipsham\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"headline\":\"Investor Buying vs. Investor Selling Affects by Inflation\",\"datePublished\":\"2023-06-21T18:11:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/\"},\"wordCount\":973,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"articleSection\":[\"Real Estate\"],\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/\",\"name\":\"Investor Buying vs. Investor Selling Affects by Inflation &#8226; Rory C Real Estate | Oakwyn Realty\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#website\"},\"datePublished\":\"2023-06-21T18:11:00+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/#breadcrumb\"},\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2023\\\/06\\\/investor-buying-vs-investor-selling-affects-by-inflation\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Investor Buying vs. Investor Selling Affects by Inflation\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#website\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/\",\"name\":\"Rory C Real Estate | Oakwyn Realty\",\"description\":\"Rory C Real Estate Updates | Home Selling &amp; Buying\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-CA\"},{\"@type\":[\"Person\",\"Organization\"],\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\",\"name\":\"Rory Clipsham\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-CA\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\",\"contentUrl\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\",\"width\":504,\"height\":504,\"caption\":\"Rory Clipsham\"},\"logo\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\"},\"sameAs\":[\"http:\\\/\\\/www.roryc.ca\\\/\",\"https:\\\/\\\/www.facebook.com\\\/pg\\\/BurnabyandCoquitlamHomes\\\/about\\\/?ref=page_internal\",\"https:\\\/\\\/www.instagram.com\\\/roryclipshamhomes\\\/\",\"https:\\\/\\\/x.com\\\/RoryClipsham\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Investor Buying vs. Investor Selling Affects by Inflation &#8226; Rory C Real Estate | Oakwyn Realty","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/","twitter_card":"summary_large_image","twitter_title":"Investor Buying vs. Investor Selling Affects by Inflation &#8226; Rory C Real Estate | Oakwyn Realty","twitter_description":"With most consumer products, the price increases as the quality or features improve with each new subsequent model. Any real estate investor can tell you that real estate does not &hellip; [read more]","twitter_creator":"@RoryClipsham","twitter_site":"@RoryClipsham","twitter_misc":{"Written by":"Rory Clipsham","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/#article","isPartOf":{"@id":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/"},"author":{"name":"Rory Clipsham","@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7"},"headline":"Investor Buying vs. Investor Selling Affects by Inflation","datePublished":"2023-06-21T18:11:00+00:00","mainEntityOfPage":{"@id":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/"},"wordCount":973,"commentCount":0,"publisher":{"@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7"},"articleSection":["Real Estate"],"inLanguage":"en-CA","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/","url":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/","name":"Investor Buying vs. Investor Selling Affects by Inflation &#8226; Rory C Real Estate | Oakwyn Realty","isPartOf":{"@id":"https:\/\/www.roryc.ca\/blog\/#website"},"datePublished":"2023-06-21T18:11:00+00:00","breadcrumb":{"@id":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/#breadcrumb"},"inLanguage":"en-CA","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.roryc.ca\/blog\/2023\/06\/investor-buying-vs-investor-selling-affects-by-inflation\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.roryc.ca\/blog\/"},{"@type":"ListItem","position":2,"name":"Investor Buying vs. Investor Selling Affects by Inflation"}]},{"@type":"WebSite","@id":"https:\/\/www.roryc.ca\/blog\/#website","url":"https:\/\/www.roryc.ca\/blog\/","name":"Rory C Real Estate | Oakwyn Realty","description":"Rory C Real Estate Updates | Home Selling &amp; Buying","publisher":{"@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.roryc.ca\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-CA"},{"@type":["Person","Organization"],"@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7","name":"Rory Clipsham","image":{"@type":"ImageObject","inLanguage":"en-CA","@id":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg","url":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg","contentUrl":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg","width":504,"height":504,"caption":"Rory Clipsham"},"logo":{"@id":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg"},"sameAs":["http:\/\/www.roryc.ca\/","https:\/\/www.facebook.com\/pg\/BurnabyandCoquitlamHomes\/about\/?ref=page_internal","https:\/\/www.instagram.com\/roryclipshamhomes\/","https:\/\/x.com\/RoryClipsham"]}]}},"_links":{"self":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts\/22085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/comments?post=22085"}],"version-history":[{"count":1,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts\/22085\/revisions"}],"predecessor-version":[{"id":22086,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts\/22085\/revisions\/22086"}],"wp:attachment":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/media?parent=22085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/categories?post=22085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/tags?post=22085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}