Real Estate Investment vs. Inflation

The U.S. real estate market remains hot ahead of the spring selling season, with existing home sales up 6.7% as of last measure, according to the National Association of REALTORS®. Experts attribute the growth in sales to an uptick in mortgage interest rates, as buyers rushed to lock down their home purchases before rates move higher. Conforming mortgage rates have increased almost a percentage point since December, with the average 30-year fixed rate mortgage briefly exceeding 4% in February, the highest level since May 2019.  

Many analysts projected home price appreciation would slow dramatically in the fall of 2021 and then continue to soften throughout 2022 but so far that hasn't happened.  In San Diego, we continue to witness Sellers receiving $50,000 - $450,000+ over their list price.  Homes that are receiving this 
amount of activity are typically priced at current market value, have little competition in terms of comparables and are in very desirable markets.  Every home has a different story and I am happy to share my experiences working with Sellers and Buyers in this market.  

America's Finest City also topped the list for having the nation's most unaffordable housing market.  It doesn't mean we have the most expensive homes though.  San Diego beat out San Francisco in terms of being the least affordable city to buy a home and that's because San Diego wages have not caught up with rising housing prices.  

In an annual Gallup poll, Americans chose real estate as the best long-term investment.  With inflation on the rise, many Americans agree that an investment like real estate truly shines and is a great hedge during periods of high inflation.  Len Kiefer, Deputy Chief Economist at Freddie Mac recently stated: "If you're thinking about waiting until next year and that maybe rates are higher, but you'll get a deal on prices - well that's risky.  It may be more advantageous to purchase this year relative to waiting until 2023 at this time."  

The conflict in Ukraine, volatility in the stock market and oil prices are expected to bring on possible changes in consumer behavior and the next months will be telling.  Real Estate continues to be a strong investment for many in these unusual times.  I continue to speak with many of you and appreciate all your referrals.  Please call me to discuss any questions or more details on the existing market.