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Most people are aware of COVID-19’s impact on the supply chain, which has upset the national and global economy. When combined with an influx of online shopping, the decreased staffing as the virus spread globally caused shipment delays at every step of the journey. Emergency approval of COVID-19 vaccines and mandated precautions temporarily slowed the spread of the illness, but states and their constituents have since relaxed their vigilance. However, infection and hospital rates have again increased with new COVID-19 variants as such Delta, and more recently, Omicron.
Economic changes have directly and indirectly influenced the real estate market, too. Experts have identified key ways the new COVID-19 variant could impact real estate. With Omicron quickly spreading, these factors are here to stay for at least a bit longer.
First, purchasing power will shrink as inflation rises. The U.S. central bank has yet to impose limits on these rates, which has allowed them to rise. This reflects the Federal Reserve’s previous view that the inflationary period was only transitory. Federal Reserve Chair Jerome Powell has recently admitted that this descriptor no longer fits the country’s economic progress. Experts suggest inflation will continue to increase at least until next summer.
Secondly, mortgage rates are rising, increasing real estate prices along with them. Increased mortgage rates reflect the Federal Reserve’s sale of large-scale bonds. Although the Reserve has been phasing out the sale, it could expedite that process to combat high mortgage rates. Finally, consumers are warier, both about the economy in general and their personal finances, and inflation and real estate prices play an essential role in that.
Expectedly, these things can all harm the real estate market, not to mention the economy overall. We’ve already seen some of the effects. For example, many listers have had to drop prices as the market became saturated with available homes. This trend may likely continue. Sellers may also choose to take their property back off the market until more buyers can afford higher home prices. That choice is a wise one. As the cost of necessary goods and services has risen, many potential buyers have pushed back their hunt for a home, whether an upgrade or first home.
Still, motivated buyers can consider other options, including a hard money loan. Hard Money Lenders AZ is happy to help clients secure construction and land loans, investment property loans, and private loans, among others. These loans help buyers secure residential, commercial, and investment real estate without waiting.
Of course, federal regulations could provide relief in the future if inflation spirals out of control. However, neither buyers nor sellers should rely on that when planning real estate activities.
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