Will Rising Interest Rates Lead to Inflation?

Philadelphia Housing Market

Will Rising Interest Rates Equal Inflation?

Fluctuating interest rates can have both negative and positive effects on the market, and it is important to understand how this can affect inflation in the housing market. Higher interest rates make money more costly and borrowing money less appealing to consumers, which in turn, may lead to inflation. According to CNBC, the Federal Reserve policymakers are trying to slow down the economy, in a way to subdue inflation in 2022. Essentially, less demand means that sellers will, in theory, have to cut down prices in order to get customers to buy. 

Does This Apply to the 2022 Housing Market?

How does this apply to the housing market in 2022? It seems that most people feel that home buying is unaffordable these days, since prices appear to be at a high and mortgage rates seem to be at a high. However, experts are noticing a post-pandemic rebound in the housing market, and are predicting to see a steady recovery. 

In the short term, housing prices are higher than years prior. With the Federal Reserve cutting its portfolio of about $5 trillion in treasury and mortgage backed securities in May, housing prices are predicted to lower for the rest of 2022. According to Forbes, “some experts believe that mortgage rates are close to peaking”, and will then become stable and even decrease. 

According to Moody’s Analytics Chief Economist Mark Zandy–

“With home sales under pressure, the parabolic increase in house prices will soon peter out, and some price declines by mid-next year seem more than likely,” says Zandi. “With rates now moving quickly higher and affordability and demand being hammered, prices will come under pressure.”

Keep in mind that these are predictions made by experts, and the housing market can change due to unforeseen volatility. Since the housing market is difficult to predict, and especially complicated to understand, it’s important to have a trusted Philadelphia real estate agent in your corner. 

Find a Philadelphia Real Estate Agent Who is Knowledgeable Nancy Alperin Headshot

Whether you are buying a new condo in Rittenhouse Square, or selling a historical home in Washington Square, you need a realtor who understands the ups and downs of the housing market in real time. No matter your housing goal, the trusted luxury realtors at Maxwell Realty are prepared to walk you through the home buying process, with your best interest in mind. Call the best Philadelphia realtors at (215)546-6000 or fill out our contact form to get in touch with a Rittenhouse Square realtor today.

Currently, Maxwell Realty is featuring a variety of listings in the Philadelphia area– from a restored mansion on Spruce Street to sleek, high-end condos on both Chestnut Street and Walnut Street. These properties are located in Rittenhouse Square, and in close proximity to major shops, upscale dining, greenery, universities, and some of the best entertainment in downtown Philadelphia. If you’re looking for a home in Philadelphia or looking to sell your home in Philadelphia, we are here to help.