Inflation in the marketplace could affect your plans in the Charlotte area.

How does inflation impact the housing market? Inflation is a simple equation of supply and demand in our real estate world. Supply has been incredibly low, and demand has been extremely high. Another way inflation has worked its magic into the real estate market is that money has been cheap with low interest rates. Until interest rates rise to where they were about a year and a half ago, we’ll see prices increase, which is good if you’re thinking about selling your house. However, some people will be priced out of the market, and a lot of them are continuing to rent.

Three things could happen in the market moving forward:

1. The market could flatten. Interest rates would need to jump dramatically and quickly to put some people on the sidelines and level out the supply and demand.

“Real estate is a good way to hedge against inflation.”

2. Prices could decrease dramatically. If this were to happen, which isn’t likely, banks have learned from the pandemic and the 2008 recession, and they are willing to work with buyers and homeowners with late payments, lost jobs, etc.

3. Continued drastic price increases. We hope we don’t see this. In North Carolina, we saw 21% gains in home values last year.

Our advice for this market is still to purchase, especially if you’ll be in your house for more than six years. Since the 1970s, inflation has chased home values, not the other way around, so real estate is a good way to hedge against inflation over the next few years. If you have any questions, don’t hesitate to reach out to us by phone or email. We look forward to hearing from you.