Staten Island real estate

How Does Inflation Impact the Housing Market?

  • George K. Wonica Sr.
  • 04/15/23

Buying a home has been challenging the last few years, as high demand and limited inventory spiked prices. Now inflation is making itself felt throughout the economy. How does that impact the housing market, particularly the Staten Island real estate market?

Inflation and Home Prices

As inflation continues to impact the overall economy, interest rates spike. That is good news for buyers, who are starting to see mortgage costs and home prices decrease. Sellers, who have had the upper hand for a significant period, are now looking to cut their prices as buyer demand cools.

Inflation affects home prices because the dollar's buying power is reduced. That means you can't get as much house for the same $100,000 as you might have a few years ago. But there is also a potential for housing prices to continue to rise since investors could turn to real estate and its perceived safety during inflationary periods.

Clearly, inflation is impacting home prices and demand, but it remains to be seen if it will mean prices begin to drop or if they continue to rise as investors look to get into the market before prices rise even more.

The Staten Island Real Estate Market: Is Demand Going Up or Down?

Staten Island real estate has always been seen as an affordable option in the greater New York area, and it means that demand has been consistent, even as prices have risen. Yet, recent changes in interest rates have seen that demand start to decline.

Staten Island real estate has mirrored the turbulence of the national market. Now, interest rates appear to be moderating. A new equilibrium is starting to appear. The lack of affordable options will continue to impact the market far more than mortgage rates, which plagues markets around the nation, including the Staten Island real estate market.

In 2022, Staten Island real estate listings decreased, and pending sales were down. Median sales prices rose 8.2% in 2022 and decreased marginally in 2023. So it appears that some balance between demand and pricing is beginning to appear in the Staten Island real estate market. However, national inventory shortages will likely keep prices from dropping significantly because buyer demand is still higher than inventory in many areas.

To recap, inflation is reducing your buying power and decreasing demand in many areas of the country. The result is that housing prices are starting to decline slightly, but with investors looking for opportunities, it is unlikely that housing prices will drop dramatically.

How does this impact your home search in Staten Island? First, be clear about your budget and what you need in a home. Current inventory might mean you must decide what you must have or what your family can live without. Second, work with a real estate agent that understands the market and can guide you through this interesting time in the housing industry. At Wonica, we have decades of experience in the Staten Island real estate market. Let us help you find the right home in Staten Island today.

Wonica Realtors & Appraisers are Staten Island's #1 independent full-service real estate firm, serving the needs of the community for over 30 years. Whether you are buying, selling, renting, or relocating, our staff of highly trained professionals will provide quality realty services with personal attention to your individual real estate needs.

Work With Us

We help you understand the market and where to price your home for a fast sale. Our REALTORS® are familiar with the trends so they can help you appeal to a variety of potential buyers.