The housing market is often affected by economic factors, such as the availability of jobs and the cost of building materials in a particular area. While these are important, many additional factors can affect the housing market. If you are interested in selling your home or are looking to buy, it is essential to understand the following factors and how they affect you and this country.
Rising Costs
Inflation and supply chain issues can affect the housing market directly. In fact, many things that happened in the broader economic climate have implications for the housing market. The cost of everything is rising exponentially, from paper goods to gas. If the materials cost your contractor more, they will often factor that into the cost of the home, passing those price hikes on to you as the consumer. Home prices tend to keep pace with inflation as prices go up. Housing prices tend to at least keep pace, if not exceed inflation.
Supply and Demand
Prospective buyers are trying to keep up, but demand is soaring with such a limited supply of homes available. Home prices are rising at their highest rate in 15 years. In fact, some homes are selling within hours of going on the market. Prospective home buyers can often find themselves in bidding wars or with their dream home vanishing from the listings right before their eyes.
Two factors are causing this demand spike. First, not enough homes are being built to keep up with the population growth. Second, more people can work from home now and don’t need to commute. Many city dwellers have now chosen to leave for the space and square footage that the suburbs provide.
There are other options, such as building your own home, that could help to combat the issue of supply, but is the modular home market going up as well? We will have to keep our finger on the pulse of the home market to know for sure.
Supply Chain Issues
The supply chain delays from COVID-19 are suppressing supply in key industries related to the production of homes. Everything from screws to glass can be hard to come by, and if you purchase domestically, there is often a higher cost involved. The supply chain issue should balance itself out, and we should expect that prices will eventually level out as we work to combat the delays; however, for now, expect to see higher costs in everything you purchase, including your next home.
Home Sweet Home
The economic factors affecting the housing market can affect your ability to purchase your dream home. Job availability and the cost of living are just a few factors to consider. Current and prospective homeowners will need to keep their eyes on the state of the housing market over the next few years.
