Inflation is weighing on buyer decisions, according to a study. While 24% now plan to move faster, 1 in 10 have canceled plans and 29% have decided to delay.
SEATTLE – Three out of four (73%) of homebuyers and sellers say inflation is influencing their future plans, according to a study commissioned by Redfin.
Of Americans planning to buy a home in the next 12 months, 29% of respondents said they’re delaying homebuying plans due to inflation. Twenty-four percent of respondents are moving up their homebuying plans and 11% are canceling plans altogether.
Meanwhile, 10% of sellers said inflation caused them to move up their home selling plans, 7% are delaying and 3% are canceling.
“The way Americans interpret news about rising prices can have a variety of effects on their financial decisions, including homebuying,” says Redfin Chief Economist Daryl Fairweather. “Some people may delay buying because they’re worried that with prices rising on everything from food to fuel, now is not the right time to make a huge purchase – but others might move faster to find a house because they’re worried home prices and rent prices will increase even more, and they want to lock in a fixed payment.”
The survey results come amid reports that inflation is at its highest level in nearly 40 years, with consumer prices jumping 6.8% in November from a year earlier. Increasing prices for gas and other energy sources are driving the inflation surge.
Inflation’s impact isn’t always directly related to the cost of a home purchase. For many buyers (73%), higher gas prices have caused them to rethink the cost of a longer commute. To compensate for a higher commuting cost, 35% plan to drive less often or drive a more efficient vehicle, and 25% plan to shorten their commutes. One in five buyers (21%) plans to buy a cheaper home.
“Different homebuyers react to high fuel prices in different ways, depending on their circumstances,” says Redfin Deputy Chief Economist Taylor Marr. “Some people will pay a premium to shorten their commute, while others will opt for a more affordable home to make up for expensive gas or a new – but more fuel-efficient – vehicle.”
Inflation fears also impacts rising home energy costs: 36% of respondents said they plan to add energy-saving features to their home, 33% plan to move to a more energy-efficient home and 15% plan to move to a smaller home.
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