How Are Changes in the Housing Market Impacting the Economy

As home inspectors, the Kenco Home Inspection team is on the front lines of the housing real estate market. We work with many clients in the process of buying or selling their homes. Therefore, we think keeping tabs on the ever-changing house market is essential.

The Expanding Housing Market

Over the last five years, low-interest rates and minimal housing inventories created record increases in home prices. As such, buyers found it difficult to find and afford homes. It was a seller’s market where the sky felt like the limit.

In fact, many people would purchase a home without requiring any repairs or remedies from the seller. Often, buyers skipped the home inspection process and hoped for the best. This was a risky and stressful time for buyers.

How the Housing Market Is Changing

Mortgage interest rates have increased in recent months in an attempt to stabilize inflation. When mortgage rates rise, the monthly mortgage payment for new homebuyers increases. Therefore, many potential buyers won’t qualify for loans on homes with soaring prices.

At the same time, many people fear a looming recession. The thought is if a recession hits, the housing bubble will burst. Then, home values would plummet.
Many experts don’t believe we are in a housing bubble that will experience a major burst. Instead, most experts predict home prices will level off. In other words, if you’ve purchased a home at a high price over the last few years, you probably won’t suddenly lose value in your home. However, you likely won’t experience the double-digit appreciation felt over the previous few years.

If you’re looking to purchase a home, you may find that the housing prices don’t keep rising, but with increased interest rates, your estimated monthly payment won’t go down.

How the Housing Market Impacts the Economy

The housing market impacts the larger economy, and changes in the economy affect the housing market. While higher costs on everything from energy to food have challenged U.S. consumers, the current housing market remains strong.

Economists differ in opinions on what will happen in the next few years with the economy and housing market.

As interest rates increase and the economy tightens, fewer people may be able to purchase homes. However, the housing inventory of the last few years left many people without viable options to buy. These homebuyers may now reenter the buying market.

If housing slows or people go through foreclosure, it will impact the larger economy. Yet, we are not in a situation like the 2007/2008 housing crisis. While we all may experience a pinch, we aren’t likely to see a devasting punch to the gut because of the housing market. This is according to experts who predict a continued strong housing market for at least the following year.

The bottom line? Be wary, but don’t panic. Listen to wise sources and make smart decisions for your budget.

Your Trusted Partner for Home Inspections

If you are planning to buy or sell a home, a home inspection remains a vital part of the process. You benefit from unbiased information regarding the current condition of the property.

Kenco Home Inspections offers high-quality service for homeowners in Southeast Florida. Contact us today to schedule a home inspection.