Tag: stagflation

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Stagflation Causes Higher Prices and Fewer Transactions

Supply and demand are out of sync, and builders can’t swing hammers fast enough to keep up.

Stagflation in the context of the housing market describes a combination of high inflation of the price for properties, and economic stagnation as reflected by a slow growth rate of properties for sale. The high demand for properties at any price is keeping inventory moving quickly — too quickly to allow new home builders and existing home sellers to fill the demand.

Though homebuilders continue to respond to the elevated demand, the number of homes being completed continues stagnate due to persistent supply chain problems, as reported by Bloomberg. “For want of a nail, the battle was lost,” as the saying goes, and so goes our economy. This stagflation is a headache for buyers and builders alike, but it’s a boon for sellers of existing homes. Demand is not going away; it’s a painful patch for our economy. Stagflation is a period when slow economic growth and joblessness coincide with rising inflation. As oil and gas hit record prices, Google searches for the term “stagflation” have spiked.#stagflation #newhomes

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The Fed tries to use interest rates to steer the economy time will tell if it’s working.

Copyright © This free information is provided courtesy of L.A. Loft Blog with the information provided by Corey Chambers, Realty Source Inc, DRE 01889449; MPR Funding Inc NMLS 2000513. EAC22060702KT We are not associated with the seller, homeowner’s association, or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com, Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties are subject to prior sale or rental. This is not a solicitation if the buyer or seller is already under contract with another broker.

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Stagflation Effects on Housing Demand

REAL ESTATE MARKET NEWS

ASK COREY

Q: Corey, what is the effect of stagflation on housing demand?

A: Thank you for your question. Demand is connected to supply and price. Stagflation is a combination of economic stagnation and price inflation, both of which place downward pressure on demand. Housing demand therefore is very strongly affected negatively by stagflation. Stagflation destroys demand for housing. The results is that prices go up while the number of buyers goes down. Home values and rents increase while fewer people can afford them. More money circulates, which fools some people into believing that they have the same or more money, while their purchasing power actually decreases. For real estate, this means fewer transactions, larger dollar amount, yet less real compensation for real estate professionals and investors, and less real investment in the real estate sector. The silver lining in this cloud benefits real estate companies and investors who already have more assets, those who best implement newer technologies and those who are in a position to take advantage of other major changes in the economy, including those with highly trained, efficient teamwork and workflow systems. As the worst overall economic situation, stagflation fools the general public by flooding the system with more money, yet providing even less purchasing power. Stagflation tends to initially benefit the government and the wealthy while taking away from the middle class.

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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.