How Does Inflation Affect The Housing Market?

How inflation affects the housing market. The CPI update today showed 8.5% inflation including real estate, food and energy. Higher inflation means the Federal Reserve will move to raise the federal funds rate and mortgage loan rates will follow. The real estate market has seen record gains in the last few years as there has been a record level of demand and low supply of homes for sale.

High inflation also means people are moving to real estate since it is a hedge against inflation. Home buyers also have to pay more each month in a mortgage payment, but they can always refinance when inflation is under control and interest rates go back down.

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