How High Gas Prices Could Affect Homeowners
Bad news — it seems 2022 will not be the breath of fresh air we all craved. The three-year streak of disastrous events continues, and this time, the U.S. housing market could be sorely impacted, according to Realtor. Soaring gas prices have validated reports of the U.S. experiencing the worst inflation rates of the 21st century, sparking fears of another recession. Though a possibility, the constant negative news cycle and the culmination of recent economic affairs have already led to turmoil in the stock market and investment portfolios. If this situation is left unresolved, the consequences could substantially affect or crash the real estate market.
Experts are concerned about what this could mean for homeowners and investors since the U.S. housing market is already up to its neck in a record-low inventory of homes for sale, fast-rising housing prices, and increasing mortgage rates. But it might be too late; the spike in food and gas prices has increased the cost of renting, buying, constructing, and owning a home significantly. According to Sean Snaith, director of the Institute for Economic Forecasting at the University of Central Florida in Orlando. "While wages are growing at a fairly rapid pace, the cost of living is rising even faster. Your paycheck can buy fewer things."
What does this situation mean for homeowners?
According to BBC News, the soaring cost of fuel has pushed the U.S. annual inflation rate to 7.9%, which is the biggest year-on-year leap since 1982. Today, rent is up nearly 20% from last year and the average cost of a house on sale has now jumped by 14.3%. This means that it is even more expensive to buy or rent a house than ever before, but the situation could worsen if the U.S. faces a recession. This is because the housing market is typically first to second in line to feel the toppling of an economy. Buyers, who are looking to purchase their next home, may be reluctant to purchase properties because they do not want to deal with hefty prices and high rates that will increase their monthly housing payments.
In some cases, sellers may also try to avoid the inflated cost of packing up a home, moving, and setting up new roots as it would be even more pricey due to high gas prices. At the peak of this situation, inventories will run low because fewer homes would be listed as a result of inflation, high gas prices, and stock market volatility.