Inflation is impacting housing market
CAPE GIRARDEAU, Mo (KBSI) – Inflation is impacting everything from food and gas prices to the housing market.
According to CoreLogic, national home prices rose more than 20 percent year over year in May. Inventory is still tight and interest rates are on the rise. Many would say it’s a sellers’ market right now.
Edge Realty broker and owner Bill Cole say that with interest rates increasing, you might want to manage your expectations of what you can truly afford.
“But we are also seeing the interest rates skyrocket so that’s having an effect on the amount of home that somebody can buy so that that’s the negative impact but homes are definitely still selling,” said Cole.
Mortgage rates are tied to the 10-year treasury bond and during times of inflation like right now, interest rates rise, making it harder for buyers to get loans.
“The bond rate tends to go higher and then the mortgages follow that so while there’s not a direct correlation with inflation there is an indirect correlation,” said Cole.
With that being said, Cole says it’s still a good time for buyers looking for homes to purchase.
Right now, the number of homes up for sale is slowly increasing and the market is starting to normalize.
“Well, it’s still a good time and historically the rates are still low but when during the pandemic they dropped to really honestly it wasn’t even a market rate at 3% and below for mortgage rates that was it just has never happened before so I would argue we’re returning to a more normal market,” said Cole.
But while the market seems to be cooling off, as inflation increases and the cost of living goes up, all we can do is wait and see what is next.
“I don’t know where that all lands overall in terms of the July consumer price index but we’re all just waiting to see what happens next,” said Cole.