Is Housing Inflation Slowing Down? Trends To Look For In 2023 – Forbes

Key Takeaways

Many factors contributed to the rapid rise in home and rent prices over the past few years. Because of the long process from building to selling homes, it takes time for housing inflation to slow. The outlook for 2023 is cloudy, with many factors coming into play.

Over the past few years, the trend of rising home prices has left many would-be buyers priced out of the real estate market. Some are even hoping for a housing crash to allow them to buy a home. Here is why housing inflation spiked during the past few years and why any slowing is unlikely, at least in the near term.

Rapid rise in home prices

While home prices were rising before the pandemic, this black swan event increased the speed for a variety of reasons.

First, the pandemic introduced everyone to remote work, where you could live anywhere, not just within a short distance of your office. Many people left large, expensive metropolitan areas for the suburbs and rural areas that had lower living costs.

Another factor was investors taking advantage of easy lending terms, low interest rates, and the opportunity to increase their net worth on paper. They bought properties to rent to third parties. As this trend became a popular way to earn money on the side, more people decided to try their hand at buying and renting properties for passive income.

Due to supply chain issues, fewer new homes were built during the pandemic. During this time, homes under construction were delayed further by local municipalities taking a long time to issue permits. Even as these issues have eased recently, many home builders are pausing projects due to fears of a recession and weak demand.

Commodity prices for

The original article can be found here