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Inflation In The US

Many Americans have been feeling the supply chain issues and have even seen the costs of almost everything go higher and higher at an accelerated rate. Housing has also inflated much faster than in most years and Nevada has surpassed its peak value in homes from record highs around 2006. The median sales price in Clark County is now $350,000 which is the highest it has ever been. Supply continues to be an issue despite foreclosures hitting the market again. There is a lot of reasons on why real estate prices are higher and now there is action happening at the Federal Reserve that could effect the way prices will go.

Wall Street also had a major role in home pricing as they flooded the market by buying as much inventory throughout the US as they could as investment opportunities dry up. The reason funds purchase real estate, is because the hedge funds always look at research such as risk analysis and financial outlooks to make their investment decisions. Zillow actually over leveraged their buying power and have taken a huge hit on their stock price because they have disclosed that they way overpaid for their real estate inventory. As more and more home-buying companies start correcting their acquisition prices, home buyers will become less and less competitive. As the demand for offering more than asking lessons, the more competitive homeowners will have to be on their pricing.

The Federal Reserve just announced that they want to increase the pace of their current tapering because they believe we are in a boom rather than inflation. The Bureau of Labor and Statistics publishes monthly inflation rate charts in a model they use to measure inflation as seen here. As you can see, we are now at an all-time high of 6.2% which is higher than that 5.4% we had in 2007 right before the recession. One way of looking at this inflation rate is by simply being a consumer in this market. It is no coincidence that this number is almost accurate to everything we buy today.

There are many possible catalysts for everything being priced the way it is but without a doubt we are in an inflated economy. Mortgage rates are expected to go up as the Fed tapers the rates back to normal which will make it harder for buyers to qualify for higher purchase prices. As this adjustment happens, homeowners will likely need to price competitively because there will be less buyers available to sell to at those higher values.

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