I’ve been asked about what impact inflation will have on our real estate market. From listening to economists on the topic, the short answer is that inflation will continue to rise and looks likely for 2022 and beyond and higher inflation does not bode well for interest rates.
So why does inflation lead to higher interest rates, even when the Fed Reserve recently said that it is not likely to raise interest rates? The Fed can control short-term rates, it can’t control long-term rates which can easily rise if lenders get nervous about inflation. For now, mortgage rates are still very attractive at around 3%, but if rates go up, there will be added pressure on the real estate market demand.
Summary on the Local Market:
Scotts Valley median home values went down slightly to $1.22M from $1.29M a year ago with 15 closed sales versus 13, last year. Santa Cruz home value went up to $1.32M vs $1.05M last year and 48 vs 65 closings. From the San Lorenzo Valley, Felton’s median sale price is up to $775K vs $750K last year. Although the markets seems to be cooling off a bit, homes are still receiving over asking price which means multiple offers. See reports below for more detailed information.
On another note, I have been able to recommend quality contractors to my clients. If you are planning any upcoming projects for the holidays, I am happy to share my recommendations for painters, flooring, cleaners, solar, decks, plumbers, electricians and the list goes on.
As always, I am happy to provide a market analysis for your home or answers any specific questions you my have about buying or selling in today’s market.