Is Real Estate A Good Hedge Against Inflation?

How to deal with inflation
Income-producing properties can be a great strategy to fight inflation.

Go to any cocktail party these days and chances are you will hear some discussions about inflation. Whether you are at the fuel pump, the grocery store, or essentially any other store, you will quickly realize that inflation is out of control. In fact, in just the past 17 months, inflation has gone from 1.4% in January 2021 to as high as 8.5% in March 2021. On the bright side, the data for April 2022 reflected an 8.3% rate of inflation. Regardless, we are experiencing 40-year highs in inflation and all-time highs in fuel prices. Needless to say, this is putting significant financial pressure on the American population. So what can you do to weather this storm? We discuss a good option below.

Inflation leading to a recession?

Inflation can be truly dangerous to the average person when it comes to retirement savings. Essentially, inflation is the decrease in the purchasing power of the dollar. For example, What a dollar could buy in 1950 now takes $10 to purchase today. According to the Federal Reserve, a healthy economy should have a 2% inflation rate.

By definition, a recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in gross domestic product (GDP) in two successive quarters. As of now, we recently posted a quarterly fall in GDP and are awaiting the next quarter’s announcement. With this said, many argue that we are already in a recession. Nonetheless, investment strategies will be critical in weathering this recession regardless of when it officially starts or how long it lasts.

Income-producing properties can make inflation work for you

Owning income-producing properties can not only be a great strategy to keep pace with inflation, oftentimes your income from rental properties may even surpass inflation. In fact, there is no better example of this than rental properties right here in South Florida. Over the past 12 months, the median rent in South Florida has increased by 57.2%. This happened to be the largest increase in the nation. Needless to say, this figure well surpassed the inflation rate. Assuming that you have a fixed-rate mortgage for your rental property, your loan payment remains the same while your income spread increases as rents increase. Of course, other associated expenses for the property generally increase over time and must be taken into consideration as well.


When it comes to securing your financial future, it is critical that you assess the effects of inflation on your retirement portfolio. If you do not currently own any income-producing properties, you may want to consider doing so. Particularly in South Florida, we continue to see strong demand for rental housing. In addition, all forecasting models predict significant population growth throughout The Sunshine State for the foreseeable future. Your first step in building your income-producing property portfolio should be to contact Natasha at Live South Florida Realty, Inc.!

At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.

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