Inflation vs. Appreciation, What Is The Difference And Why You Should Care

Real Estate Training & Coaching School

Business, Careers

4.7 • 669 Ratings

🗓️ 15 February 2021

⏱️ 48 minutes

🔗️ Recording | iTunes | RSS

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Summary

What is INFLATION and how does that relate to Appreciation. When you listen to today's show you will learn what the difference is and why it matters to you. (and you clients). Today's podcast features an article that will help you understand the difference. Appreciation vs. Inflation Appreciation is when the true intrinsic value of something increases. Notice I didn’t say when the “price” or “cost” of it increases; rather the value increases. Appreciation is when something becomes more valuable, more desirable, more useful. Here are a few examples of how your property could truly appreciate: You live in a town that is immensely more desirable than it was when you bought the property, and many people are moving to town (increased demand for the same supply) You struck oil in your backyard A major employer announced it was building a facility two miles from your house, that will employ 5,000 people (who will need a nearby house to live in) In these cases, regardless of what the market or greater economy is doing, your property is now in higher demand than it used to be–making it appreciate. Appreciation is a reflection of a change in the actual asset itself. Inflation, on the other hand, can look a lot like appreciation…while not being true appreciation. Inflation is when the number of dollars one has to exchange in order to buy your property goes up. Sounds like ‘appreciation,’ right? But it’s not. You see, inflation is NOT a reflection of a change in the asset itself; rather, inflation is a reflection of the decreasing purchasing power of the currency you exchange for that asset. In other words, the asset isn’t necessarily worth more; it’s just that the dollars you have don’t have as much purchasing power as they used to, so you have to give up more of them if you want to trade for something. Source: http://www.thoughtfulre.com/understanding-inflation-vs-appreciation/

Transcript

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0:00.0	Welcome to Real Estate Coaching Radio, starring award-winning real estate coaches and number one international bestselling authors, Tim and Julie Harris.
0:21.2	Real Estate Coaching Radio is the nation's number one daily radio show for realtors
0:25.9	who demand authentic real-time coaching.
0:29.1	Get ready for fluff-free, unfiltered, full-strength honesty about what's truly working
0:34.0	to get you into action, helping others others and making money now in today's real
0:38.6	estate market now to our hosts tim and julie harris three two one and i'm back julie actually
0:48.7	has a full coaching schedule today and so she asks that i do the podcast by myself which i'm more
0:53.5	than happy to do.
0:54.5	So I'm going to talk today about something that I personally find kind of, well, it's
0:58.8	wonkish and nerdish for sure, but it's also really incredibly powerful when you understand
1:03.4	the concept of inflation versus appreciation. Now, I know this is a little bookish for some of you,
1:09.6	and some of you are not going to necessarily get as much out of this as you would have had, Julie and I have been talking about
1:14.7	something that was maybe more motivational, but I'm going to challenge all of you to stay with
1:19.5	me here, listen to what the differences are, listen to how to understand it and how to explain
1:23.7	it, and I want you to monitor that at the end of this podcast today, you are actually going
1:28.4	to feel motivated, you know, not motivated because we did a lot of rah-rah jumping around on chairs
1:33.3	and whatnot, but rah-rah because you are now realizing you've hopefully gotten a little bit
1:38.1	smarter. Now, the importance of understanding this inflation versus appreciation thing as pertains
1:43.6	to real estate is because as the market,
1:46.3	as the real estate market, as the economy and as the other things I'm going to share with you today,
1:50.4	as they start to take hold in more meaningful ways, you're going to have your own real estate clients
1:55.5	and your children and your spouses and your friends and your family. They're not going to understand
	...

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