It’s no secret that inflation and economic changes affect the housing market in the United States. Currently, the 2023 housing market is undergoing what experts call a rebalancing. The economy as a whole is making a shift, and this, in turn, shifts the housing market as well. If you’re considering buying or selling real estate in 2023, you may be left wondering what the impact of the rising inflation has on you. Keep reading to learn more about these impacts on home buyers and sellers in San Antonio, Texas.
Will making an offer below the asking price ruin your chances of scoring your dream home? Learn about reasonable below-asking offers. Plus, understand how a home purchase will play out if you still have a mortgage on your current property.
Where is inflation?
To understand how inflation impacts home buyers and sellers in San Antonio, we must first understand where the inflation rate is compared to years past.
Inflation soared in 2022 due to the economic impacts of the COVID-19 pandemic. Rates hit a nearly 40-year-high. In January 2023, the inflation rate slowly decreased to about 7 percent. Although it’s heading in the right direction, this is still extremely high compared to recent inflation rates. For example, the inflation rate in 2015 was a mere 0.7 percent.
Impacts on buyers and sellers
The first impact the higher inflation rate could have on home buyers and sellers this year is a decline in home prices and values. This is a good thing for buyers and can seem negative for sellers.
When you compare the extremely high sale prices during the pandemic to now, there will inevitably be a decline. Remember, interest rates were nearly non-existent in 2020, and home inventory needed to be more balanced. This created skyrocketed home sale prices with the simple supply and demand principle. When you compare prices pre-pandemic, the values aren’t falling too much (AKA, it’s not as bad as it may seem for sellers).
The subsequent impact rising inflation may have on buyers and sellers is the change in mortgage interest rates. We always say, “Marry the house, date the rate.” This phrase refers to the fact that if it’s time for you to make a move, do it despite the interest rates, as the speed can consistently be refinanced down the line. It is anticipated that rates will continue to climb as 2023 progresses, so if you’re thinking about buying, there’s no better time than now.
Our final noted way that rising inflation may impact home transactions is an overall slowing in sales. Again, comparing the scorching market with today can make things seem bleak, but the situation isn’t as bad as it looks. Last year home sales increased to levels we hadn’t seen since 2006. But, with consumer savings accounts dwindling due to higher prices at the grocery store and beyond, this will inevitably impact the number of closed transactions for the year.
