Inflation is the rate of increase in prices of goods and/or services over a given period of time. In the real estate world, the rate of which we have seen inflation grow has been exponential. This is largely due to an outpouring of demand for housing and not enough to supply buyers with.
Real Estate Then
Let’s look at the housing market in 2012. In January of 2012, the median amount to purchase a home in January was $253K. Then, by June of 2012, that amount sunk $1,000 to $252K.
The market dipped slightly in 2012, but over the course of the next few years prices start to gradually increase.
The housing market in 2013 was up 1.976% over the previous year in January to $258K, most would consider this a normal inflation rate. By June of 2013, the median amount to purchase a home was up to $265K.
Real Estate Now
In the beginning of 2020, the median amount to purchase a home was $316K. An increase of 22.48% over the past 7 years with inflation averaging a 3.21% increase year-after-year.
Now, let’s talk about the market in 2021. The median price to purchase a home in July 2021 was $370K, an increase of 17% from January 2020 to July 2021. That’s nearly a 1% increase in price every month!
“708,000 (SAAR) newly built homes were sold in July, up 1% from June but down 27.2% from a year ago” and “July existing home sales were up 2% from June and 1.5% from July 2020 to 5.99 million units (SAAR), according to the National Association of Realtors.” (Zillow Market Pulse dated August 27, 2021)
This information lets us know homes are being built, maybe not at the pace every potential buyer is hoping for, but it is happening. The data in the second point shows us that perspective buyers are indeed still purchasing, despite the increase in pricing.
In closing, here is an astonishing fact; home prices have increased 46.25% from January of 2012 to July of 2021!
Source: Zillow. Zillow, Inc. www.zillow.com. Accessed 1 September 2021.