Inflation is mostly happening right now because manufacturers and distributors need to pay workers more to attract and retain them, so consumers pay more to make up the difference. How does inflation affect the housing market? In several ways:
- Construction companies need to pay more, so they pass those costs to consumers in the form of higher construction and renovation costs.
- A key tool for slowing inflation is to raise interest rates, so buying homes will get more expensive as rates rise.
- And because daily expenses are higher for consumers, they’ll have less money to spend on mortgage and rent.
Eventually, the effect of these three forces will likely slow the rise in home prices, which will lead to more homes on the market. Eventually, whether due to devaluation, stabilization of our pendulum-like reactions to COVID, or aggressive action by the central bank, inflation will end. It historically always does.
Do you wait or move now? It depends on your exact situation. Why not send me an email, describing what you’d like to do in 2022? I can get back to you with my thoughts. henrywattsrealestate1@gmail.com