Transwarp Inflation Could Cause Inventory Tipping Point In 2022

Jan 21, 2022

The real inflation may just be starting this year. This could be the tipping point for creating more inventory for real estate investors this year.

So, just how high and fast could inflation be in 2022? Why might this finally open up more opportunity? How can investors help turn a new period of distress into success?

Inflation Set To Soar Through 2022

Inflation has already been one of the main headlines over the past year. What happens in the next few months though could far dwarf what has been experienced so far.

Official inflation rates have now been revised upwards to 6.8%. Of course, many consumers have been complaining that real inflation has been closer to 30% over the past year. With the cost of many items up 3x or more. 

Manufacturers and suppliers have already been planning their price increases. Many of which aren’t kicking in until Q1 2022. Companies like Heinz Kraft have announced they will be raising prices on some individual items by 20% or more. 

If official inflation for 2022 ends up being 20%, then real inflation may be triple that. On top of the inflation from 2021. 

Even the Dollar Store has announced it will now be a $1.25 store. With taxes that will push the actual cost of individual items closer to $1.50 each. Dollar General has also been switching the Popshelf brand, with prices targeting the $5 range. 

This is in addition to inflation across the board, from insurances to utilities, transport and more. 

The Tipping Point

There are certainly some business owners and workers that have been enjoying their most financially prosperous years on record. Most of course haven’t received a 30% pay raise over the last year, and hope to get the same this year. 

Some have skated by so far on forbearance plans, credit cards, savings, and stimulus. Though those things may be running out. This issue will be compounded by an expected Fed rate hike spree. 

For many this could finally create the tipping point where they cannot keep up any longer. Most don’t have the financial surplus to handle their bills tripling, without a pay raise. 

Residential Real Estate

We should expect more distress in the housing sector this year. High property prices may enable many to sell or refinance without running into foreclosure. There will also be plenty of opportunities for investors to help homeowners and renters out of unsustainable situations, and into better arrangements though. 

Commercial Real Estate

While businesses seem to have proven very resilient given all the excitement of the past couple of years, ongoing inflation, especially in taxes, as well further restrictions blamed on COVID, may finally cause many to fold and throw in the towel. This will certainly show up in retail, office and mixed use property. Many aging landlords may also decide to pass the baton onto new investors. 

Mortgage Notes

There could be some dents in mortgage performance this year. At least slow pays. Adjustable rate mortgages could be especially impacted with coming rate hikes. 

This makes this an especially great time to make money in this space. Savvy asset managers know how to source distressed notes, and improve performance, help home and businesses owners, as well as creditors and communities. And of course while being compensated pretty well in the process. 

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund