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House prices soar as inflation wreaks havoc on market |  KTA

(NewsNation) – Aggression, patience and a willingness to get into fierce bidding wars are hallmarks of a tough housing market for buyers in the United States right now, experts say.

Home prices have risen more than 20%, according to year-over-year data released by the S&P for February and the median U.S. home price climbed to $375,000 as consumers continue to see the skyrocketing prices of everything from gasoline to groceries and homes.

Inflation rose to its fastest level in 40 years, and when mixed with rising interest rates, a perfect storm for home buyers in the market was created.

Bidding wars are breaking out between buyers in the housing market as more and more buyers go over budget to get the home they want.

Tenisha Williams, CEO of Elite Realty Partners in Miami, said homebuyers need to get aggressive now in this overheated housing market, where bidding wars have taken over.

“People have to be willing to bid on these homes,” Williams said. “Even now we made an offer for one of our buyers, there were 76 offers. Patience is a virtue, and I think buyers need to be patient and be prepared to submit aggressive offers.”

Miami, Tampa, Orlando and Phoenix were the US cities hardest hit by rising home prices. Spokane, Washington, Sacramento, Seattle and Dallas had the highest percentage of home bidding wars.

A rise in the number of millennials, who now number 72 million, the largest generation in US history, buying homes has driven much of the demand. For some, this becomes too much.

“I’m about to give up because it’s exhausting,” said potential buyer Vanessa Fernandez. “I drove every day after work and to be honest it’s exhausting.”

A sharp rise in interest rates, coupled with the influx of potential buyers, has led to the boom in the real estate market that buyers are experiencing. Williams said it was the biggest interest rate hike it had seen in “at least 12 years.”

“Interest rates are averaging around 5.11%. That’s a big deal, that’s about a $500 difference from this time last year for homebuyers’ monthly mortgage.

The Federal Reserve raised its key policy rate by a quarter of a point last month, the main mechanism for fighting inflation. Multiple rate hikes, with the possibility of half-point increases, are expected this year.

Williams believes that as interest rates continue to rise, the market will cool. When that will happen, however, remains to be seen.

“With the median sale price nearing $400,000, I think the government will have to look at affordable housing,” Williams said. “At the end of the fourth quarter of last year, only about 54% of this housing was affordable. I think this market could definitely cool down. It’s too early to tell right now, but they can definitely hold out hope because someone has to buy a house.

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