Many economist are predicting that we will see major inflation in the United States because of all the money the federal government is pumping into the economy. Home prices have been going through the roof because there is not enough supply to meet demand and the price of materials has sky rocketed related to the building of new homes. We need 5 million more homes presumably built in the US to keep up with demand. It could take 3 - 5 years for that to happen so home prices should continue to remain high unless and until mortgage rates go up dramatically, which would cool the market down.
However, inflation related to the purchase of goods and services is a threat to all Americans. We see the cost of gasoline going up dramatically, which eventually ties to the cost of everything because most goods are eventually shipped by truck to your neighborhood. If you commute long distances, it will cost you more to go to work, as well. Most important, if your income is not going up to pay for higher prices, it means you will ultimately have a lower standard of living.
The good news is that if you locked in a low fixed interest rate mortgage, at least your house payments will not be going up. The same could be true for a car payment. But, if your home appreciates dramatically, in many cities, your property taxes could go up. You can also expect to see higher premiums for home insurance, since replacement value cost would go up with the higher cost of materials to rebuild your home in the event of a disaster. All of us will have to adjust to higher prices. It could mean eliminating various unnecessary discretionary expenses just to pay for day to day goods and services.
