With inflation at levels we haven’t seen since the 1980s, agents and their clients face unique risks. Here are several reasons why inflation is having such an outsized effect on you and your clients.
- Shortages and skyrocketing demand are primary causes of inflation.
- Government efforts to stem inflation have affected the housing industry noticeably.
- Macro-economic problems have amplified these issues.
Shortages and skyrocketing demand are the most obvious causes of inflation
Since January 2022, national inflation rates have ranged between 7.5% and 9.1%. These high inflation rates have made everything, from groceries and gas to home repairs, more expensive. What are some of the specific causes?
- Labor shortages in the trades—especially for HVAC technicians—have made it more difficult for homeowners to find quality contractors for their home repair/replacement needs.
- Semiconductors, which are a key part of many home systems and appliances, are in short supply, making repairs and replacements more challenging to complete.
- Housing supply and affordability continue to be at odds with demand.
And of course, Buyers in the housing market still can’t seem to catch a break. Even though the Seller’s market is beginning to cool, it’s still incredibly difficult for Buyers to afford a home. The demand for more space and a place of their own is still strong for Buyers—it’s just even harder to find it than before.
Lacking demand, unattainable affordability, and constant competition have made it profoundly difficult for Buyers and their agents to succeed.
And now, rising interest rates are making it even more challenging.
Rising rates continue to impact affordability
At the beginning of 2022, rates for a 30-year mortgage hovered around 3% on average. At the time of this writing, they’re above 6% and rising.
So, despite reports of falling home prices, rising interest rates are presenting a different kind of challenge for Buyers and their agents. In other words, Buyers may have a nominally smaller down payment, but their monthly mortgage payments are likely to be noticeably higher.
And on the other side of the coin, Sellers are hesitant to sell for similar reasons. They’re likely to get less money up front, and then they may have to navigate high interest rates on their next home.
Macro-economic issues have amplified challenges
The simplest explanation of how macro-economic issues are tied into inflation is that people want more stuff, especially following the pandemic. That has often led to shortages (see above), which cause prices to rise.
Now, add to that some larger global concerns (e.g., the war in Ukraine and subsequent food and energy shortages worldwide)—along with a shift in US demand for goods over services—and we now have inflationary concerns with little end in sight.
So, what are we supposed to do?
It’s tough out there, and there’s no polishing that fact away. But not all hope is lost, and 2-10 Home Buyers Warranty (2-10 HBW) wants to help you.
As an agent, your goal is to protect your transactions and pursue success despite a tough market. You do that when you help your clients tackle the challenges you have the power to tackle. One of the most valuable services you can add is controlling costs for clients after the sale.
2-10 HBW can help you control certain post-closing costs with a 2-10 HBW Home Warranty Service Agreement. We can also help you:
- Find deals by differentiating your Listing/Buyer presentation.
- Close deals by offering a plan for expensive breakdowns.
- Look for the next deal by helping you bolster your reputation and contributing to your referral book.
- Reduce buyer’s remorse.
2-10 HBW offers comprehensive systems and appliances home warranties to help protect your clients from unexpected repair and replacement costs. Contact us to learn more