As most realize, we are experiencing a period of, unprecedented, inflation. We see it, in, nearly, every aspect of our lives, from the cost, of fuel, at the gas tank, and heating our houses, to food expenses, etc. The current rate – of – inflation, is the highest, we have experienced, in many decades! One of the segments, where pricing has grown, most quickly, is the cost of buying a home. Obviously, many factors, influence this, including: post – pandemic – blues; limited/ lack of inventory, available – for – sale (basic economic premise of Supply and Demand); historically – low, interest rates, making low mortgages, available (and, thus, getting, more, bang – for – the – buck, by creating low monthly costs, etc. With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, potential, short, intermediate, and longer – term ramifications, of these, rising, home prices.
1. Short: In the short/ immediate – term, the major beneficiary of this, is, sellers benefit, although, if, someone, is buying another home, the benefit is reduced! At, what point, will, certain, qualified, potential buyers, decide, to wait – this – out, because it seems, too – heated, for them? How might that impact things, especially, because, no one, can read, into the future?
2. Intermediate: The Federal Reserve, seems to be, indicating, they intend to raise interest rates, in the somewhat – near, future, mostly, because of the overall – inflation rates, and certain undesirable ramifications! This will create, corresponding, decreased/ lower, mortgage interest rates! When, that happens, it will become more costly, on the all – important, monthly basis, to own a house. In addition, for those, who, seek to sell the house, they bought, at such a high – price, in the intermediate – term, they may find it challenging, to get all the costs of owning the home!
3. Longer – term: Historically, real estate markets, are cyclical! That means, there are alternating periods, of, having a Buyers, Sellers, and/ or, Neutral Market, and many factors, determine what happens! I strongly believe, those, who try to market – time, the housing market, often, lose! The probability is, over – time, we will witness, a return to observing, housing prices, slightly, out – perform, the overall, inflation rate (after, a settling – in, period, to adjust to the current, unprecedented, rate of price increases).
What will be the ramifications of the rising home prices, we currently, witness, in most parts of this nation? Since, no one has, a Crystal – Ball, the best advice, may be, stay – vigilant, and don’t become greedy!