Mortgage

How inflation is altering client perceptions of the housing market

Rising inflation affects both home buyers and sellers, causing most to either speed up or slow down their activity. But just over a quarter of the combined groups said higher prices for consumer goods and services didn't affect their plans, a Redfin survey found.

Inflation is causing 29% of respondents to postpone their buying plans, but 24% said they will speed them up. Only 11% of potential buyers said they canceled their plans due to inflation.

Among sellers, 10% said rising inflation made them move forward with their activity, while 7% responded that it was suspended and 3% abandoned. Both groups of buyers and sellers, who may overlap, were asked the same question and could choose any applicable answer.

"Some people may delay buying because they are concerned that with the price of everything from groceries to fuel soaring, this is not the time to make a big purchase," Redfin chief economist Daryl Fairweather said in a Press release. "But others might find a home faster because they are concerned that house prices and rental rates will keep rising, and they want to set a fixed payment."

Inflation usually leads to rising interest rates as the US Federal Reserve seeks to mitigate its impact on the economy.

A separate question found that 46% of respondents saw rising home prices as a sign of a strong US economy, while 38% said it was an indication of an unhealthy economy. The remaining 16% were neutral or said they didn't know.

Rising gas and energy prices also affect consumers' choice of where they live. Around a quarter of respondents looked for a shorter way to get to work, while 21% redirected their search to cheaper property. But 35% generally wanted to drive less or buy a more efficient car. For 27%, however, higher prices at the pump would have no influence on the decision to buy a home.

However, the cost of heating or cooling a home impacted three-quarters of the plans of home sellers and buyers, as 36% said they wanted to add energy-saving features to their home and a third planned to move to an energy-efficient property. Another 15% wanted to move into a smaller house. Rising energy prices would, however, have no influence on the buying or selling decision of 25% of the respondents.

The survey was conducted between December 10th and December 13th of 1,500 US citizens planning to buy or sell a home in the next 12 months.

Related Articles