Real estate prices in conditions of inflation in the USA
California is the state with the most expensive real estate in America. However, San Diego has a very overheated market even at what would seem to be the worst time for borrowing and home buying. I have many friends in America who have either already bought a house or are still planning to. Yes, now it’s not very profitable as before, but it’s cheaper than it will be later.
The Federal Reserve has been increasing the lending rate for several months in a row to calm down inflation in the country. They succeeded: from June to October, price growth decreased from 9,2% to 7,7%. Nevertheless, they continue to raise the key rate - now it has reached its maximum since 2007 and is 4%. They say that they will have time to raise more by the end of the year.
Now inflation is slowing down, but this is only felt in the cost of cars and household appliances. Experts say the housing market is at a standstill. The number of home sales in September fell 25% compared to last year. This is a record, not counting March 2020.
When the crisis ends, rates will fall again, but property prices will rise. Look, if in 2021 a house cost $600K, then in 2022 it costs a little less. This happened because demand fell due to increased mortgage rates (currently about 7,3%). As a result, the payment will still be lower for an expensive house than for a cheap one - an example in the picture. Next year, for example, if America manages to overcome the crisis, then rates will normalize. But demand will increase, and hence the cost of the house.
Author: Anton Nayanzin
