As inflation climbs to a 40-year high and housing prices continue to rise, homebuyers and sellers are uncertain about their next steps. Forecasts for further supply shortages and price increases may be further adding to the confusion.
In a new report from real estate brokerage Redfin, which surveyed 1,500 U.S. residents who are planning to buy or sell a home in the next 12 months, the vast majority of respondents say they’ve changed their plans because of inflation, both in housing prices and in other necessities like monthly utility costs.
Is now the time to buy/sell?
As consumers anticipate further increases in inflation, their reactions to the changing housing market are varied. In one survey from Fannie Mae, the majority of respondents (77%) said that now is a good time to sell a home. But for many, selling will mean purchasing their next home in the same market, and potentially having to downsize.
In Redfin’s survey, both buyers and sellers reported having changed their upcoming plans because of inflation, but the results weren't entirely predictable.
Here's what respondents said about their plans when it comes to buying a home in the next 12 months:
- 29% are delaying homebuying plans due to inflation
- 24% are accelerating their plans to buy a home
- 11% are canceling their homebuying plans altogether
Meanwhile, those planning to sell their home within that same time period stated the following:
- 10% are accelerating their home selling plans because of inflation
- 7% are delaying their selling plans
- 3% are canceling their plans altogether
The results support Realtor.com's prediction for the market in 2022: Housing supply will continue to lag in comparison to demand.
Of course, where you plan to buy can play a part. According to the Realtor.com forecast, home prices will grow by about 10% in certain areas — specifically, Providence, R.I. and Portland, Maine — while increasing just slightly in other parts of the U.S. (such as Honolulu and several Connecticut metros).
Regarding sales, the San Francisco Bay Area will see more than a 5% decrease (with nearly 6% in Cape Coral, Fla.'s metro area), while they’re projected to grow by more than 15% in Salt Lake City.
Other rising costs play a role
Rising home prices aren't the only inflationary cost that concerns homebuyers. With gas prices recently hitting their highest levels since 2014, buyers and sellers have another financial concern to juggle.
According to the majority of survey participants (73%), their plans have been further affected by rising gas prices — specifically:
- 35% are planning to drive a more energy-efficient vehicle, if not drive less
- 25% are planning shorter commutes
- 21% are planning to buy cheaper homes
Notably, the price of gas appears to also impact where people want to work and live, with some hoping to shorten the distance between the two locations. In a recent survey from Robert Half, which showed that many are planning to find a new role (41%) within the first half of 2022, 54% of workers said they're interested in remote positions in a different city or state from where they currently live.
Rising energy prices are another financial factor for homebuyers and homeowners, with some respondents reporting that their plans for this year will be directly affected by rising energy costs. Here's how buyers say they'll adapt:
- Add energy-saving features to current home (36%)
- Move to a more energy-efficient home (33%)
- Move to a smaller home (15%)
Methodology: Redfin commissioned the survey of 1,500 U.S. residents with plans to buy or sell a home in the next 12 months. The survey was conducted by research tech firm Lucid on Dec. 10-13, 2021.