Real Estate Report
The "Receipts" and "Expenses" columns in the Real Estate report do not appear to reflect inflation--the columns show current dollar value, not projected dollar value: the value stays the same every year.
I've tried using the Grow button to manually adjust for the rate of inflation (by making it grow .25%), but I shouldn't have to do that. Besides, if I do that, then I'm afraid that the program might be adjusting for inflation ON TOP of the inflation I already adjusted for.
So why is the "Today's Dollars" value showing up in the Real Estate report's "Receipts" and "Expenses" columns and not the "Dollars" value?
RSS
The assumption here is that taxes and insurance related to housing and real estate rises at the rate of inflation by default--that is, the column will show the same number all of the way down. But notice in both housing and real estate sections, there is a place to adjust the "annual real appreciation rate." If you bump that up or down, you are adjusting the value of that property relative to inflation set in your global setting in Assumptions. So then you will see property taxes, for example, increase each year because, for example, they outpace inflation.
Does that help?
Dan
Okay, I think I understand about taxes and insurance decreasing as the house depreciates, thus the numbers stay the same in the report. Correct?
But what about other expenses, like maintenance and repairs? They should increase with the rate of inflation. The repairman's rates don't change depending on the value of the house: his rates are the same whether the house is brand new or ancient. Should I enter those expenditures as "Special"?
First of all, remember that when you see the numbers the SAME going down the column, those numbers are experiencing 3% inflation (or whatever you set as global default in Assumptions). So if you have a fixed mortgage rate, you should see the mortgage going DOWN in dollars year after year. That means it's not subject to inflation. That is, it's holding steady in today's dollars and thus cheaper in terms of future dollars. It's sort of mind puzzle I guess.
I believe the assumption here is that repair expenses simply track with inflation. So you should see those numbers the same each year in today's dollars. If inflation is 3% each year, the plumber costs you 3% more next year. If it was not adjusting for inflation, you'd see this reported as cheaper next year because it eroded by inflation.
One could argue that as the house gets older you need more for repairs, but I guess they didn't go that route.
See?