Inflation here? gas/grocery prices just continue to climb
You make a good point. Because we have been told that this round of inflation was more about corporate greed rather than inflation itself, but since a large majority of single family homes are owned by individuals and families, why have we seed such inflation in housing prices like we have in the retail sector. If inflation was due to corporations then wouldn't housing prices not have gone higher(especially with finance rates being higher).
housing prices are directly related to supply and demand. Builders arent building spec homes like they once did ( most of my custom home builders are down to 1-2 spec homes per year vs 5-10 just 4 years ago ) because if they dont sell within 12 mo, that 12 mo construction loan is up and they have to either unload at a loss or refi at current COMMERCIAL rates ( cant get a personal loan rate )
So the inventory of new options dwindles, leaving sellers of existing homes with leverage to ask whatever they can get for home. Well above nominal price.
Specific to our area, what was once a $300,000 home now goes for close to $400,000. And if you are south of I12 that same home insurance USED to cost $1800-2500 is anywhere from $5000-8000 or more, depending on different factors. That changes everything, especially for buyers who were very close to crossing the line of affordability on just the mortgage note excluding Insurance and Taxes.
Inflations cause doesnt necessarily affect housing costs- they can ( and do ) act independent of each other at times.
When housing supply exceeds demand, when mortgage rates begin to drop below 5%, you will begin to see prices drop.
let me add - that is an insanely simplistic summary of macro. When you start to look at the micro environment, so many other factors come into play as well ( sorta like my mention of insurance/taxes here locally )
Another factor is land. Metropolitan areas are simply running out of land to develop. Its already developed and built upon. Only option there, tear down and rebuild which adds to the cost of new build.