Homebuyers and sellers appear poised to respond to rising costs, but are split on how historic peaks in inflation are changing their property plans.
A Redfin survey found 73 percent of homebuyers and sellers are being influenced by inflation, which hit a 39-year peak in November. The influence varies widely, however, as 29 percent are looking to delay home buying plans, while 24 percent are looking to accelerate them. Another 11 percent are going a step further by canceling home buying plans altogether.
“Some people may delay buying because they’re worried that with prices rising on everything from food to fuel, now is not the right time to make a huge purchase,” Redfin’s chief economist Daryl Fairweather. “But others might move faster to find a house because they’re worried home prices and rent prices will increase even more, and they want to lock in a fixed payment.”
The Consumer Price Index rose 6.8 percent year-over-year in November, the largest increase in almost four decades. However, the S&P CoreLogic Case-Shiller Index showed the housing market tapped on the breaks after a hot streak, as a 19.1 annual gain in home prices was reported in October, the second straight month of declining price rises.
Housing costs were on the rise last month at the fastest rate since prior to the Great Recession. The shelter component of the Consumer Price Index rose 3.8 percent year-over-year, the greatest 12-month jump since June 2007.
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The survey was commissioned by Redfin and conducted by Lucid from Dec. 10 to Dec. 13. It surveyed 1,500 residents planning to either buy or sell a home in the next year.
Sellers also appeared to be changing their plans, albeit not to the same degree. Ten percent of respondents are speeding up their selling plans, while seven percent are slowing them down and three percent are canceling them.
The report noted gas prices, a public barometer for widespread inflation, can indirectly influence home plans. According to the survey, 73 percent of homebuyers and sellers are having plans impacted by rising gas prices. Twenty-five percent want to shorten their commute, while 21 percent plan to buy a cheaper home as a result.
“Some people will pay a premium to shorten their commute, while others will opt for a more affordable home to make up for expensive gas or a new – but more fuel-efficient – vehicle,” said Redfin deputy chief economist Taylor Marr.
Rising energy costs are also influencing three-quarters of the survey’s respondents. A third of respondents are planning to move to a more energy-efficient home, while 15 percent plan on moving to a smaller home.