FAQ: How has the recent jump in inflation affected home prices?

A: Inflation is an increase in the cost of goods over time, and therefore a decrease in purchasing power. Historically, as inflation rises, so does home prices.

The past two years, home prices have soared, but in recent months, we’ve been starting to see home prices soften a bit.

As people have to now spend much more for gas, food, clothes, etc, their budgets to purchase a home are smaller.

The combination of inflation, plus higher mortgage interest rates have made it much less affordable for homebuyers. And with less buyers, sellers are finding themselves lowering their asking prices.

What does this mean for buyers and sellers?

» Sellers: Selling your home now can still net you a lucrative return on your investment, considering the unprecedented appreciation of home prices in the past two years.

» Buyers: If your circumstances and budget allow, this could be a golden opportunity with less competition and a little more supply.

--

Originally published in the San Francisco Chronicle on July 24, 2022.