RealtyBizNews - Real Estate Marketing and Beyond
Real Estate Marketing & Beyond
Home » Housing » Rising inflation adds to housing costs

Rising inflation adds to housing costs

By Mike Wheatley | December 15, 2021

Growing inflation is negatively impacting consumers, leading to higher gasoline prices and grocery costs. In November, consumer prices were up 6.8% from a year ago, representing the largest annual gain in 40 years.

shutterstock 2051027639

Some of the biggest price increases were seen for energy, food, cars and shelter, which together comprise around 61% of all consumer spending. They account for 81% of all inflation over the past year, MarketWatch reported.

The impact of inflation is also very noticeable in the real estate industry. Renters, for example, are likely feeling it with average rents up 3% year-over-year and noticeably higher in many markets. Rents are accelerating by around 5% annually, the National Association of Realtors’ Chief Economist Lawrence Yun told MarketWatch.

They’re not helped by rising utility costs – natural gas prices have jumped by an incredible 25% in the last year, meaning higher heating bills.

Yun said rising inflation will likely also cause mortgage rates to increase in 2022. The 30-year fixed-rate mortgage is predicted to reach 3.7% by the end of 2022. Rates averaged 3.10% last week, according to Freddie Mac.

Still, Yun said real estate does at least offer investors a good hedge against inflation.

“In the 1970s, a high inflationary period when [the Consumer Price Index] averaged 7.1% per year, home price gains outpaced inflation with a 9.9% gain,” Yun explained. “Even when interest rates soared in the 1980s and thereby crushed home sales, home prices still held up to consumer price inflation: 5.5% versus 5.6%.”

Yun said previous periods of high inflation have shown similar patterns. As such, he said anyone concerned about a loss in purchasing power due to inflation can offset that by investing their wealth into real estate, so long as they have the means to do so.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
  • Advertise with RealtyBizNews - Media Kit
  • real estate digital marketing
  • Get Digital Marketing Training
    right to your inbox
    All Contents © Copyright RealtyBizNews · All Rights Reserved. 2016-2022
    Website Designed by Swaydesign.
    linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram