Charlottesville Real Estate Blog

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 whethere 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.  When inflation is low, a real estate investor will want to buy, and when inflation is high, a real estate investor will want to sell.  You can look at inflation data here.