Inflation and Property Values
When considering appreciation, you must consider the economic impact of inflation. An annual inflation rate of 10% means that your dollar can only buy about 90% of the same goods the following year, including property. If a piece of land was worth $100,000 in 1970 and sat dormant and undeveloped for decades, it would be worth many times more today. Because of runaway inflation throughout the 1970s and a steady rate since, it would likely take more than $700,000 to purchase that land in 2021, assuming $100,000 was fair market value at the time.
Thus, while inflation can lead to real estate appreciation, it is a Pyrrhic victory. While you may get five times your money when you sell due to inflation, many other goods cost five times as much to buy, so purchasing power in your current environment is still a factor.
