For many Americans, housing is the most expensive cost. It may be a prudent thing to do for everyone to brace for a housing inflation storm.

Table of Contents 

  1. What Is an Inflation Storm?
  2. How Can the Inflation Impact the US Housing Market?
  3. How Does the Current Inflation Affect the Real Estate Market?
  4. Is a Housing Inflation Storm Coming?
  5. What Occurs When Inflation Stops?
  6. Find a Profitable Rental Property Investment Using Mashvisor
  7. Conclusion

Now, if you’ve ever been trapped in a storm, you’re familiar with the feeling of being struck from all directions. Even though it is not climate change, purchasers who are upset about rising costs may feel as if they are caught in a housing market inflation storm.

In this article, we’ll go through the consequences of the housing inflation storm and how you should respond to it.

What Is an Inflation Storm?

Simply put, inflation occurs when an economy’s “aggregate demand” for services and goods surpasses the economy’s capacity to fulfill that aggregate demand at the existing price point. Prices must increase to balance the overflow of demand over supply.

The difference between aggregate demand and the economy’s ability to deliver goods and services—the economy’s potential output—can be impacted by several variables, which change over time.

Currently, US inflation is at its highest level in four decades, raising concern among many consumers, particularly among people planning to buy a home. Will the market downshift as a result of inflation? Will house prices fall? Is there going to be another housing crash?

An inflation storm is coming to the US housing market and will undoubtedly impact both purchasers and existing homeowners. However, the effect will not be as severe as many fear.

How Can the Inflation Impact the US Housing Market?

The inflation barometer’s shelter element grew 0.4% between November and December, down from a 0.5% rise. Nonetheless, yearly growth established new highs. The component that reflects the comparable rent that landlords would pay for their homes, for example, increased by 3.8% between December 2020 and December 2021, the fastest pace since 2007.

Housing prices are the most significant component of the total Consumer Price Index (CPI), representing the significance of rent and mortgage costs in a household’s budget. For instance, it is a must. Many people cannot avoid paying for housing, whether they rent or buy.

Renters and purchasers are both facing similar housing inflation challenges, although for varying reasons. Purchasers are seeing price increases due to supply restrictions, worsened by increased material costs such as wood. Rents for tenants are rising as people return to cities in greater numbers.

Despite the fact that inflation storm housing reaching record highs in terms of the index, the rises look moderate in relation to other indicators of home prices. It is because the COVID-19 pandemic made it more challenging to evaluate the potential housing inflation storm, mainly because the CPI is reliant on survey data.

Now let’s focus on more recent data and see how the potential housing inflation storm affects the real estate market.

How Does the Current Inflation Affect the Real Estate Market?

When we talk about inflation in economic terms, we’re talking about rising costs compared to the currency’s value.

Do you wonder why houses are so expensive right now? Well, when inflation grows, the same quantity of items and services costs more than they did earlier. The home market is no exception. In general, if prices go up throughout the economy, house prices will rise, too.

Nevertheless, there is a solid case to be made that housing is pushing national inflation. The Consumer Price Index is a significant indicator of inflation inside the economy. According to the most recent statistics, the CPI is over 8.5% from last year.

If you’re trying to purchase a house, you might think that’s an exaggeration. The Case-Shiller Home Price Index is a crucial indicator that tracks home prices. It is a three-month rolling average of property prices in major American cities. Unadjusted, home prices are up 19.1% from January 2021.

There are several causes for the price increase. The extra money that poured into the wallets of many qualified Americans in the hopes of giving the economy a boost during the pandemic is one factor leading to overall inflation. People are prepared to pay significantly more if they unexpectedly hold more cash than before. As a result, some additional money is coming through that was not previously present.

It doesn’t explain the dramatic rise in property prices. Another pandemic phenomenon is also at work. People were now spending far more time at home than usual—all of it contributing to the housing inflation storm.

Related: How Is Inflation Affecting the US Real Estate Market? 

Is a Housing Inflation Storm Coming?

If you make financing inexpensive enough, prices will rise as individuals are willing to pay more. Increasing property prices remained the subject of many housing market forecasts in recent years. Prices are growing quickly right now—thus, the housing market forecast may come true.

Moreover, it’s critical to understand your finances if you’re trying to buy a property in the current US housing market. Try to make sure that you are pre-approved. Sellers and their brokers are more open to considering an offer from a buyer using financing since it’s one less reason for the payment not to go through.

Besides knowing how much you can spend at the peak of your budget, you should also know how much you’re willing to pay, regardless of how high the amount from your bank is. You want to be able to afford a house without going into bankruptcy during the inflation storm housing market. What is best for you is to have enough money left over for savings, dining, the occasional trip, or something else you like without overspending.

What Does the Housing Inflation Storm Mean for Potential Investors?

In an inflation storm housing market, it is often profitable to own real estate for many reasons. Let’s take a look at them.

Home Prices

For example, during inflation, property prices rise precisely as much as, if not more than, the rest of the economy’s costs. It indicates that you’re likely to acquire capital in your property faster after deducting the down payment and any previous payments faster due to value growth.

Meaning not only will you gain more money if you sell, but you will also enjoy more financial freedom to achieve your goals if you refinance.

Protect Yourself From Future Increases

Rising interest rates throughout inflationary periods are a reasonable concern. Still, if you’ve secured a locked-in interest rate, you can guard yourself against potential future increases, especially if you choose a fixed-rate mortgage.

Furthermore, landlords find it simpler to raise the rent during times of housing inflation storm. When rents are rising elsewhere, it’s easier to justify raising your own the next time you need to extend your lease with your tenants.

Will This Be a Good Time to Sell?

Currently, there is a significant shortage of housing units. It is critical because people prefer to buy existing homes since they are cheaper than new ones. As of now, existing house sales outweigh new house sales by a factor of over six.

The core of the problem for house purchasers is that every existing property on the market would be sold within two months at the current sales rate. As a result, it is a genuine seller’s market. A market is generally considered balanced between purchasers and sellers when there is six months’ supply.

Moreover, home prices follow a cycle. Due to the lack of inventory, sellers may be tempted to list their houses immediately, taking advantage of rising prices. If enough people list their income properties and rates keep rising, purchasers may exit the market, generating an oversupply.

If sellers see that their house isn’t selling after several weeks on the marketplace, they may opt to reduce their pricing until purchasers return to the market and the cycle begins to flip back in their favor.

Related: Buyer’s Market or Seller’s Market in the US 2022 

What Occurs When Inflation Stops?

The inflation storm for housing market and the economy will eventually cease. Prices cannot continue to grow permanently without damaging the dollar’s value—therefore, the Federal Reserve is already taking steps to combat inflation, such as increasing interest rates.

Furthermore, in a housing inflation storm, many homeowners are likely to demonstrate a logical desire to sell at the market’s peak. As interest rates climb, they will likely assume that the top is near since budgets, after all, aren’t infinite. Considering such a development, it comes down to the fact that many individuals will try to sell their property in the next year or two.

If enough houses are put on the market, supply and demand will eventually be balanced. At that moment, home prices may or may not decrease, but we are unlikely to witness the rapid growth of price rise that we’ve experienced due to the limited availability of properties. In the future, the housing market will gradually start to recover.

Find a Profitable Rental Property Investment Using Mashvisor

Mashvisor differs from other platforms in that it does not focus just on Airbnb or traditional analytics. It handles both, and users can obtain all of the necessary data analytics, identify properties that suit their specific needs, and compare rental tactics to find the best one.

Mashvisor’s data is always accurate and up to date. It gathers data from several sources, evaluates it for accuracy, and organizes it. Real estate investors may then quickly examine the data. You will save time and money by using Mashvisor to help you achieve your goals.

Mashvisor Tools

Mashvisor tools are all intended to support one another. Because they are so related, each offers a solution for every stage of real estate investing. Among the features are:

  • Off-Market Properties
  • Lead Qualification Tool
  • Property Finder
  • Property Comparison
  • Heatmap
  • Neighborhood Analysis
  • Property Calculator

We will cover the most significant ones for you to efficiently fight the inflation storm US housing market and make the best investment decision right now.

Real Estate Heatmap

It helps assist you with your initial investment property search and is pretty simple. The Real Estate Heatmap feature is a map of the city or area you’ve picked, with available properties represented as pins. The map will alter when you move between traditional, Airbnb, and investment homes. It is color-coded to show which real estate markets are hot and which are not.

Related: Heatmap Analysis: The Secret to Successful Real Estate Investing

Property Finder

The Property Finder enables you to filter homes on your display based on your own preferences. Aside from the financial factors mentioned before, you may also filter homes by construction year, the number of bedrooms and bathrooms, property type, etc.

When looking for the ideal property for your interests, it features advanced filtering that enables you to limit your options. It saves you a significant amount of time that you would otherwise spend manually combing through thousands of listings.

Rental Property Calculator

The Rental Property Calculator by Mashvisor assists investors in determining the profitability of a home. Investors can evaluate the following parameters using our property calculator:

  • Rental Income
  • Rental Expenses
  • Cash Flow
  • Cash on Cash Return
  • Cap Rate

The excellent thing about the tool is that it gives you predictions for traditional and Airbnb rental strategies, allowing you to choose the best rental approach. There are also rental comps to assist you in calculating the selling price of the home.

Housing Inflation Storm - Mashvisor's Rental Property Calculator

Mashvisor’s Rental Property Calculator allows investors to evaluate the profitability of a property according to several parameters, such as rental income, expenses, cash flow, cash on cash return, and cap rate.


Prices have increased rapidly due to the housing inflation storm cycle and a shortage of home supply relative to demand. If enough supply arrives, there may be an overstock. If that occurs, prices will fall until demand matches them.

Furthermore, mortgage rates have gone up as the Federal Reserve adjusts benchmark interest rates to combat inflation. If you want to purchase or refinance, you may protect yourself against rising rates by carefully analyzing the real estate market and properties using Mashvisor.

To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.

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