Here’s how the war in Ukraine and inflation are affecting our market.
If you’ve watched the news recently, you know that everyone is talking about the war in Ukraine and inflation. How are these factors affecting our real estate market?
First, I want to mention that I am praying regularly for the people of Ukraine, and I hope this war ends as soon as possible. However, the effect this conflict has on our real estate market isn’t entirely negative. When times are difficult, investors tend to move their money from the stock market into hard assets, such as real estate. **The security of housing becomes more attractive when the future becomes uncertain. **
Rising inflation is having a similar effect on our market. Traditionally, real estate appreciates at the same rate as inflation; sometimes, home values even outpace it. This makes real estate a great hedge against inflation.
On top of this, interest rates are rising. As of this blog post, rates are just under 5%. While that isn’t a terrible rate from a historical perspective, it does mean that homes have become less affordable, and demand will start to decrease. That being said, about 40% of homes in our area are purchased using cash. Rising rates may curb demand, but as long as supply remains low, there is no reason to expect a price decrease. In fact, our real estate market may experience double-digit appreciation this year.
As always, it comes down to supply and demand. Our inventory remains incredibly low, and global conflicts are driving investors towards hard assets like real estate. As long as these factors remain, we’ll be in a strong seller’s market. If the war in Ukraine turns into something bigger, it could have a different impact on our area. For now, it’s still a great time to buy or sell.
If you have questions about today’s topic or anything else related to real estate, please call or email me. I would love to help in any way I can!