1564 Meadow Lane
Mountain View, CA 94040
4 Beds | 3 Baths | 2,590 sqft | SOLD $4.336M
1929 Johnston Ave
San José, CA 95125
4 Beds | 2.5 Baths | 2,123 sqft | SOLD $2.53M
5085 Derek Drive
San José, CA 95136
2 Beds | 1 Bath | 900 sqft | SOLD $1.101M
We are in the midst of a global economic re-awakening, with at least 56 nations currently experiencing inflation above 4%. As a point of comparison, the U.S. inflation rate in 2008 was 3.84%; but it has risen as high as 11% in 1974 and 13.55% in 1982!
So, what causes inflation? There are three types: demand-pull inflation – when the demand for goods and services increases quicker than production capacity; cost-push inflation – the result of an increase in the cost of production and labor; and built-in inflation – driven by standard cost of living increases.
Of course, there are two sides to every coin. Just as inflation may have a negative impact on renters and those without a lot of assets, it can help homeowners and landlords access additional wealth as their property values rise.
Based on early returns from 2021, national real estate economists are predicting a surge in supply from new home construction, the winding down of mortgage forbearance due to COVID-19, and a higher level of consumer confidence thanks to widespread vaccinations.
Higher home prices and higher mortgage rates will also create less demand. That means properties will remain on the market longer, leading to less hurried decisions for homebuyers. Meanwhile, rental prices will slowly increase with inflation. (More in Number Talk later this week!)
You can probably feel it in the warm pre-summer breeze, but the housing market continues to heat up around the Bay Area, and particularly in San Mateo County. Sales volume and median prices are well above the pandemic market of a year ago, and properties are on the market two days less on average!
With more people working and educating their kids from home, it probably shouldn’t come as a big surprise that bigger homes are trending. As you’ll find from this graph, Santa Clara County saw a huge spike in sales by square footage in Q3 2020. We’ll see if things shrink back to normal in 2021.
