In This Report
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What If Higher Inflation Is Here to Stay?
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Potential Investment Properties
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Market Trends
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About the FERNWOOD Team
What If Higher Inflation Is Here to Stay?
By Cleo Li
We’re now roughly four years into a post-COVID inflationary era. Inflation has subsided from its peak in 2022 but remains stuck above the pre-pandemic rate and the Fed’s target of 2%. The recent financial market narrative has been dominated by the re-emergence of inflationary pressures, and the perceived likelihood of a further Fed rate cut in December has dropped significantly (41% now, down from 91% just a few weeks ago). An economist I respect and follow, John Mauldin, gave an excellent explanation of the likelihood of an inflation resurgence in .
First, the percentage of items in the CPI (Consumer Price Index) showing 3% or greater annualized price increases. It settled back from the 2022 peak but began rising again in early this year. []
Housing prices have the largest weight. The rose 3.6% in the last 12 months through September.
If housing keeps getting more expensive at a similar rate, and other things that had been flat or declining turn higher too, another inflation wave becomes very likely.
Second, the pressure of servicing the humongous Federal debt. The . That’s about 3% of the U.S. GDP (~$30 trillion) just for the interest payment of the federal debt! * Historically, it’s not unusual for highly indebted regimes to try to bail themselves out with inflation.
So, the bottom line is that we could be living with higher inflation for the foreseeable future. What can we do to stay ahead of this monster that constantly threatens to drag us backward?
Real Estate as a Hedge Against Inflation
The hedge works primarily through two mechanisms:
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Rising Rents: Rental rates for residential properties can typically be adjusted annually to keep pace with rising costs. This direct link to inflation helps protect the investor’s cash flow.
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Appreciation and Leverage: Inflation often translates to an increase in the property’s value over the long term. If the property was financed with a long-term fixed-rate mortgage, inflation effectively reduces the real value of the debt while the asset’s value and income rise—a powerful wealth-building dynamic.
Real estate has consistently outpaced inflation in about 85% of 5-year rolling periods since 1985. This is supported by historical analyses of the compared to the CPI and other asset classes, demonstrating real estate’s strong track record as an inflation hedge. What about the property segment we target in Las Vegas? , respectively. This far exceeds the average inflation.
What About Stocks?
The choice between stocks and real estate often boils down to a fundamental trade-off between liquidity and income reliability ().
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Stock Market Liquidity: Stocks (equities) are highly liquid. You can sell shares almost instantaneously at a known market price with minimal transaction costs. This makes the stock market ideal for capital that may be needed quickly. However, this liquidity comes with high volatility—stock prices can swing wildly based on news, sentiment, or global events, making the income (dividends) less reliable during severe market downturns.
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Real Estate Income Reliability: Real estate is inherently illiquid. Selling a property takes time and involves high transaction costs. In exchange for this illiquidity, real estate offers greater income reliability through consistent monthly rental payments. These rental cash flows are less correlated with daily stock market swings. For investors prioritizing predictable, inflation-adjusted monthly income—the cornerstone of financial independence—real estate’s stability often provides a psychological and financial advantage over stock market volatility.
Conclusion
At Fernwood, we believe real estate’s strength in hedging against inflation makes it a critical part of any investment portfolio. However, you must account for real estate’s illiquidity. So, you need a balance: stocks for liquidity and real estate for income reliability.
If you’re interested in exploring how the current Las Vegas market conditions could align with your goals, please use the link below to schedule a time that works best for you.
Potential Investment Properties
Below is a link to this month’s list of candidate investment properties. Our proprietary data mining software selected these candidate properties from thousands of available properties, and this is just the first step in our multi-step validation process, as shown below.
Market Trend
Below are charts from our latest trailing 13-month market report, which includes October data. Remember that this data is only for our target property profile, not the entire metro area.
The chart below, from the MLS, includes ALL property types and price ranges. The overall inventory is trending down.
Rentals – Median $/SF by Month
Rents dropped MoM, not surprising for the time of year. However, the median $/SF has remained in a tight band of $1.16/SF and $1.20/SF for the past 13 months.
Rentals – Median Time to Rent by Month
Median days to rent remained flat MoM at 29 days, indicating a healthy rental market.
Rentals – Availability by Month
The number of homes for rent decreased MoM, which is surprising for the time of year (it usually rises during the fall).
Rentals – Months of Supply
Rental inventory decreased MoM, now at 1.5 months, indicating a strong landlord’s market.
Sales – Median $/SF by Month
Prices had a marginal drop MoM, as expected for the time of year.
Sales – List to Contract Days by Month
Median days on the market increased moderately MoM, signaling a slow down towards the holiday season.
Sales – Availability by Month
The number of properties for sale has been decreasing since June, which again bucks the “usual” seasonal trend.
Sales – Months of Supply
Sales inventory has remained in a tight band around 2.5 months for the last several months, indicating a consistent seller’s market.
About the FERNWOOD Team
We Help Busy Professionals Build Wealth through Strategic, Data-driven Real Estate Investments in Las Vegas.
Here is what our clients have to say about us:
For the last 17+ years, we’ve helped clients build highly reliable, passive income streams through real estate that they will not outlive. Several are now retired and living entirely on their rental income. Most never invested in real estate before they started working with us, and most live in other states or countries. Below is a two-minute video of the services we provide.
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