There has been a lot of talk lately about inflation and how that is impacting areas of everyday life. Your local real estate market feels the ripples of inflation in quite a few different ways. Let’s gain a better understanding of what you can expect with your house on the market by looking at what inflation means for home sellers in Phoenix:
Property Values Are Way up
A market trend that has been running wild over the last few years is skyrocketing property values. Once the repercussions of the Covid-19 pandemic began to be felt across the country, real estate markets were jolted into a state of high demand and very limited supply.
There were a couple of reasons for this market response. First, both buyers and sellers second-guessed getting into the market because of the uncertainty and potential risks the pandemic presented. Sellers, in particular, decided to cautiously keep an eye on the market while waiting to see how all aspects of day-to-day life would adapt to a new normal.
Once the economy began to slow down, the Federal Reserve cut lending interest rates substantially. This lowering of interest rates made refinancing their existing mortgages extremely enticing to many homeowners and even caused some would-be sellers to back out and choose to refinance instead.
What ultimately occurred was a massive surge in buyer demand and a lack of home supply, which led to such an offset that home prices flew through the roof.
Interest Rates Have Jumped As Well
Looking back at our previous discussion of lowered interest rates, things have transitioned. The Federal Reserve has raised lending interest rates three times in recent memory, and this means more restrictive lending from banks and credit unions.
Buyers having a harder time getting approved for a home loan means eliminating those buyers from the market, and lowering the demand for homes. Despite this decreased demand, prices have stayed high in large part because the imbalance of supply and demand was so great that it’s only now beginning to course correct.
Buyers Are Intensely Motivated
With high home prices and inflation having ballooned over the last few months, buyers are feeling the squeeze.
Renting has become a big part of the American real estate landscape, and some of those renters are now finding themselves in an unenviable position. Landlords are doing everything they can to claw back lost revenue from the height of the pandemic and are executing plans to cash in on an economic perception that supports their raising rents. While your rent can change over time, your mortgage payments are most likely to adjust only due to fluctuating insurance premiums and tax rates.
This fear of rising rents has given rise to a group of buyers trying to purchase a property to get out from under the possibility of massive cost-of-living increases in the next year or so.
Now Is Your Opportunity
Keeping all of these factors in mind when selling your home, understand that they are going to be temporary to some degree.
The market will certainly begin to shift away from being so clearly favorable for sellers, and taking advantage of such market conditions is the smart thing to do. The most likely development is a reduction in demand as buyers settle into their current living scenario while creating a plan to restart their home buying journey once the market has turned more in their favor.
Getting your home on the market while this window of opportunity remains open is essential to seeing the best returns for your years of invested time, energy, and finances.