Inflation in 2022 has led to significant jumps in prices of many goods and services. The cost of gasoline rose almost 50% as food prices increased more than 6%. How is the housing/real estate industry being affected by inflation?
The cost of shelter has risen 3.8%, according to the Consumer Price Index (CPI). This is something that mostly affects home buyers, especially considering how the Case Shiller U.S. Home Price Index rose to an 18.6% annual gain in home prices between September 2020 and 2021. The underbuilding gap in the U.S. also makes it harder for Americans to buy a new home.
The pandemic was a major driver of inflation rates due to it causing supply chain issues that resulted in the reduction in the U.S.’s housing inventory. Furthermore, rising costs and limited supplies of building materials such as iron and steel have pushed up housing prices as well. With consumers spending more money on goods compared to other years, supply and demand have become imbalanced with the consequence being inflation and the problems it brings with it, such as rising interest rates, to last at least an year.
Although the future of the housing market remains unclear, expert predictions show that there will continue to be decreasing inventory of available homes as well as reduced demand due to the growing interest rates. However, this poses an opportunity for real estate investments to shine. Investments in commercial real estate (CRE), real estate investment trusts (REITs), and metaverse real estate are long term and can provide a return on investment that is beneficial for you.
Real estate has helped investors stay ahead of the curve, so why not you?
