Home prices rise along with inflation
COLUMBIA, Mo. (KMIZ)
Inflation rates are among the highest since 1981, with prices rising 8.5% over the last 12 months -- 7% higher than price growth in 2020.
Inflation is affecting everything from gas prices to grocery shopping, including the housing market. Mortgage rates and inflation coincide with one another, and as inflation rises, that means that the cost of mortgage rates will increase as well as federal regulators raise interest rates to slow the economy.
Meanwhile, home prices themselves are also rising, creating a sellers' market in Mid-Missouri and across the country.
The average cost to purchase a home has increased by close to $10,000 each year. However, the national average cost to purchase a home went up $20,000 between 2021 and 2022. According to the Federal Reserve Economic Data (FRED), the national average cost to buy a home in March was $293,577.
The average sale price of single-family homes in Columbia rose 13% in March to $323,019, according to the Columbia Board of Realtors. The median price is up 12% year over year at $275,000. The number of homes for sale and the number sold declined by 14%.
John Mayfield is the President of Missouri Relators, who said that a sellers' market "means we have fewer homes available for sale, and many more buyers." Despite it being a sellers' market, Mayfield said that they are still seeing strong sales and that it might actually be a good thing for buyers.
"We believe that with inflation, it's actually going to take some pressure off of maybe investors entering in the market, buying some of these properties, and may provide opportunities for first-time home buyers."
House of Brokers Realtor, Megan Walters, said, "at the end of the day it's an opinion if the housing market is going to pop if it's in a bubble, we don't know, no-one knows, it's looking into a crystal ball at the end of the day."
Walter's told ABC 17 that she advises her clients that be less leveraged in homes. Walter's said that people should try to put more money into down payments, look at houses slightly below their budget, or fixer-uppers, to build equity in their property.
Renters are also being hit in the pocket as inflation continues to drive up the cost of renting a home.