Home buyers and sellers across the country are wondering how the current state of the economy is affecting the housing market. Before you start thinking about renovating your home to sell, there are some real estate circumstances to be aware of that will help you know what to expect.
The price of everything is up
You’ve probably noticed that the cost of everything has gone up from electricity to a loaf of bread: Inflation means higher prices.There are many reasons why this is happening such as the pandemic, the war in Ukraine, supply chain issues, and an employee shortage due to more people opting to quit their jobs. Prices are on the rise not only for houses on the market, but repairs, and new construction. Homeowners who are making updates to sell may experience sticker shock. Buyers may also need to adjust their budgets when they see that home prices are higher than they expected.
Inflation and housing
In part due to inflation, some real estate agents are reporting that home prices increased by 19.3% between February 2021 and February 2022. With interest rate increases, that number went to an 18.3 % increase between May 2021 and May 2022. Economists are further reporting that mortgage rates could go up to 7 percent this year. As interest rates go up, the housing market slows down, with some buyers deciding to put their real estate plans on hold.
What inflation means for buyers
With mortgage rates on the rise, the price of homes could actually go down, equalling good news for buyers. Buyers who work with a trusted real estate agent can closely watch the market to keep an eye out for deals. Another important factor for buyers to consider is that the price of a new home isn’t just the sale price. Inflation means that the cost of everything could go up including home repairs, utilities, and even insurance.
What inflation means for sellers
Should you sell your house now? Real estate agents recommend that if you want to sell, it could be a good idea to sell soon. As the market slows down, prices could go down meaning sellers could get less for their homes. When the market slows down, sellers may need to work harder to attract buyers, such as by not only lowering the sale price, but also by getting their home in top shape by making updates and repairs.
Will inflation continue to rise?
There’s no way to know how much inflation will really go up. Some economists predict that inflation will go down at a rate of 2 percent by 2024. For those buyers and sellers who can put their plans on hold, it might be best to wait and see how the market shifts in the next few months before making a drastic change.
Real estate agents will tell you that anytime is the right time to sell — Don’t let the current market hold you back from your real estate goals.