Everyone is experiencing the pinch of inflation right now. The U.S. inflation rate is at a 40-year high of 7.5%, as of January 2022.
As home values rise, the investment you’ve made in your home increases, too. And because different factors in the industry are interconnected, it takes a lot to rock the housing market.
Let’s dig deeper into understanding all the ways inflation can affect your home buying process.
1.Home Appreciation. Real Estate Values Usually Rise in Line with Inflation.As inflation climbs for everyday items you’re purchasing, it also drives up home prices. That means more equity for you if you’re already a homeowner.
2.Home Prices.Supply and Demand Still Play the Largest Role in Valuation.Regardless of market conditions, supply and demand always play the largest role in pricing.
3.Interest Rates. Rising Rates Can Counteract Inflation.Interest rates usually follow inflation, meaning they increase in line with it. Specific to the housing market, rate increases typically push demand down, as fewer new buyers enter the market.
4.Drastic Inflation Doesn’t Go on Forever.It’s important to remember that we can’t predict every scenario, and it doesn’t pay to pine over all of the what-ifs because many of them will never happen. What we do know is that businesses and governments have highly vested interests in ensuring continued high inflation doesn’t go unchecked.
Source:https://fhmtg.com/2022/02/17/how-inflation-impacts-your-home-buying-journey/
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