Inflation Drives Home Buyers To Adjust Their Plans
Roughly 1 in 10 respondents are cancelling their plans to buy or sell a home because of inflation.
Soaring inflation is having a volatile effect on homebuyers and sellers, with some delaying a purchase while other consumers speeding up their plans, according to a new report from Redfin.
“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,” according to the report. “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 data show that 73% of homebuyers and sellers say inflation is influencing their future buying or selling plans.
Responding to a recent Redfin-commissioned survey of Americans who are planning to buy or sell a home in the next 12 months, 29% of respondents said they’re delaying homebuying plans due to inflation, while 24% are moving up their home buying plans and 11% are canceling plans altogether.
“The way Americans interpret news about rising prices can have a variety of effects on their financial decisions, including homebuying,” said Redfin Chief Economist Daryl Fairweather.
Inflation at 40-Year High
The survey results come amid reports that inflation is at its highest level in nearly 40 years, with consumer prices jumping 6.8% in November from a year earlier. Increasing prices for gas and other energy sources are driving the inflation surge.
Seventy-three percent of survey respondents said rising gas prices are impacting decisions about their commute. Thirty-five percent said they plan to drive less or drive a more efficient vehicle because of rising gas prices, while 25% plan to shorten their commutes. Twenty-one percent said they plan to buy a cheaper home.
“Different homebuyers react to high fuel prices in different ways, depending on their circumstances,” said Redfin Deputy Chief Economist Taylor Marr. “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.”
Home Energy Prices Also a Factor
Three-quarters of respondents also said the rising cost of home energy is impacting their home buying or selling plans. Specifically, 36% of respondents said they plan to add energy-saving features to their home, 33% plan to move to a more energy-efficient home and 15% plan to move to a smaller home.