5 Factors Increasing Housing Costs in the United States in 2022

Planning to buy a home shortly but finding that housing pricing has gone up! You contact a mortgage broker, and find that your current family income is not getting the kind of loan you were looking for! This is something that is happening to several people, and people are surprised by the rising pricing of housing pricing everywhere in the USA. Last two years, during the Covid-19 pandemic, the housing market was going through a decline as the demand had dried up. However, no one thought that pricing will shot up like this at such a rapid pace.

In this inflated market, the knowledge about the factors that are fueling this demand can help you to plan better, and save money on your home purchase. In this blog, we will discuss the prime reasons that are driving housing pricing up to the sky.

Factors driving the housing pricing up:

1. Mortgage interest rates are rising:

Although the covid-19 pandemic did bring the mortgage rates to their lowest rate, however, the mortgage rates have increased considerably in the recent months. The main factor has been the decline in the effect of Covid-19, and increases in the demand for housing among people. Experts believe that mortgage rates are touching their ceiling but it has already impacted the market, and even the best home loans are not cheap. As rates rise, home prices initially rise as many buyers hurry to buy before rates rise further. Usually, after this period housing pricing comes down.

2. The exodus of people from one city to another city to save taxes:

There has been a trend that is quite visible in the cities/states which demand higher taxes. To save taxes, people are moving to the cities/states where taxes are less. One of the prime examples of California. People have been moving out of California to places like Nevada, Texas, and Boise where the taxes are way less than in California. When this happens, it disrupts the local market, and increases housing prices in the location where people are moving, since the demand for housing increases in that particular location.

3. Demand and Supply:

This is one of the oldest and the most important factors that always impact housing pricing. The truth of the matter is that during the pandemic when the demand just hit the bottom, it affected the construction market as well. Construction of affordable housing is already a hard task due to factors like increased pricing of construction material, lack of skilled labour, and local laws. The easing of Covid restrictions has led to an increase in demand but the supply has not matched the demand.

The availability of affordable housing is expected to peak in the coming months, but the pandemic has already increased mortgage rates and housing prices.

4. Local Regulations:

Although this factor doesn’t affect the housing pricing on the national level still it does affect the local markets. There are local regulations that lead to an increase in housing pricing. These can be taxes on construction material, properties, or any regulation that makes it hard for builders to keep the housing pricing down. It certainly pushes the housing pricing up. As I have already mentioned that people are moving to cities that have lower taxes is one example of how local taxes disrupt the markets. If you are in the market, you must contact your mortgage broker to have the information on how you can save money in terms of taxes.

5. Inflation and global factors:

You sit in your home, and you read a piece of news that the war has broken up between Ukraine, and Russia. You read the news and move on to another piece of news. After a week or so you get to know that war has affected the oil pricing globally, which increases the gasoline/oil pricing worldwide. After a month, you get to know that housing pricing has gone up because of an increase in the construction material rate that got affected by the rise in gasoline pricing. Do you see a connection? But this is what has been happening, and these factors are playing a part in the price hikes in the USA. Inflation has been a problem for people in recent months, and it has affected the housing market as well.

How does a mortgage expert help you get the best home loans?

The above information is not meant to divert you away from your plan to buy a home but to make you more aware of the current trends. In the current situation where you know that you need to look at the best options for the loan, an expert mortgage broker can take you out of your worries from getting the highest possible loan at the best possible rate to advising about the ways to save money, an expert in the mortgage is significant. PierPoint Mortgage is one such company that has years of experience, dedicated professions, and a customer focus approach to make your home buying journey a smooth ride. Contact PierPoint Mortgage by clicking here.