【Zillow】Housing Demand in a High-Inflation World

Housing Demand in a High-Inflation World: Why Non-Shelter Inflation Might Not Dent Buyer Demand

Buying a home today with a fixed-rate mortgage can serve as a hedge against housing inflation, locking in a fixed monthly cost of shelter, and securing a place to live, insulated from the risks of rising prices, interest rates, and rents. We just experienced the fastest-ever pace of increase in home prices, as well as a rapid rebound in rents, so potential homebuyers may still be keen to guard against future rises in housing costs. The rise in prices of everything else, meanwhile, could leave potential homebuyers with less budget room for their mortgage payment; or it could make housing look relatively more attractive as a worthwhile place to spend. That latter effect, combined with rising costs for builders to construct new homes, could contribute to home prices rising further in the near term, pushing homeownership further out of reach for potential first-time buyers.

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