What Inflation and a Shifting Housing Market Looks Like on Either Side of the Atlantic

It’s no secret that skyrocketing inflation rates have greatly impacted the largest and smallest areas of the country, which can be seen in everything from the housing market to justify the cost of items at the local grocery store.

Many families have changed or adjusted their moving plans in the coming year to take into account the rising costs of operation, new housing or rental prices, and even everyday expenses like childcare and gas. Many have moved into cheaper housing options, or have cut daily costs to be able to still afford the homes they want amidst skyrocketing prices and stagnated salaries. However, as officials in the US seek solutions to solve this inflation problem and balance incomes versus the costs of things, how is inflation impacting those overseas, and how is this reflected in each respective housing market? We’ve taken a look at moving trends and how inflation has impacted those looking to move in the United States and Great Britain in different ways.

How Does Inflation Impact Moving?

If inflation has seemed like an issue initially only impacting you at the gas pump or the grocery store thus far, you might be initially curious as to how it can impact a sphere as large as the housing market, but you would be surprised at how many different markets inflation can impact worldwide.

Just in the United States, inflation has impacted families to the point of many homeowners not being able to afford to move in the coming year, due to rising interest rates, housing prices, rental prices, and the costs associated with moving, which in turn impacts not only who is buying new houses, but who is selling them as well.

Around the world, politicians are trying to raise interest rates to offset the rising cost of living, though this doesn’t help everybody. Rising interest rates, though they can have positive impacts on those with savings, can negatively impact those relying on credit cards to help ease the stress of bills.

The Impact of Inflation on the US Housing Market

In the United States, the beginning of 2022 saw mortgage interest rates hovering at around 3%, which was considered low. At the beginning of 2023, these interest rates have more than doubled to 6.5%, which is the highest interest rate seen in over a decade.

This might not impact those with fixed-rate mortgages or those who bought their homes last year with 3% as their fixed interest rate. For those looking to buy in the coming months or in the future, however, these interest rates can make or break an opportunity to move entirely.

Homeowners with locked-in interest rates have the incentive to stay in their homes with their current monthly payments, rather than moving as they previously planned and in turn having to take out a loan with these sky-high interest rates. With less housing inventory, housing prices are kept high and the housing market slows. For first-time homebuyers, this means that not only will they have to pay more in upfront costs for a home in addition to paying more on their mortgage thanks to high-interest rates, but they also have significantly fewer homes to choose from.

The Impact of Inflation on the UK Housing Market

Overseas, the impacts of skyrocketing inflation are deeply felt, but in a different manner than in the United States. In Great Britain, mortgage rates have also risen rapidly, but with different outcomes.

There, most mortgages only have locked-in fixed rates for the first two to five years of the loan, or have variable rates that change when the Bank of England raises or lowers rates. Because of this, many residents have or expect to have much higher monthly payments on their mortgages than they’ve been able to prepare for, with no way to afford these rates. As salaries remain the same with costs skyrocketing, many UK homeowners will be forced to leave their homes as payments become undoable.

With these factors in play, the consequences of skyrocketing inflation in the UK will not only keep those who can afford the higher payments in their existing homes less likely to buy different ones or move but will also push many to move out of their homes that are no longer affordable. These families will be forced to either buy cheaper homes, while still having to pay high-interest rates on mortgages, or will push into renting, the rates and competition of which are also skyrocketing alongside inflation. These interest rates and high housing prices will also make those interested initially in purchasing their first home less likely to buy.

Whether looking at the housing markets in the United States or the United Kingdom, there’s no question that the housing market and homeowners are significantly impacted by skyrocketing inflation. How policymakers intend to handle this crisis will also significantly impact the moving industry and those who intend to relocate in the coming year.

Still, looking for the right affordable moving services to bring you to or from your current home? Carey Moving & Storage will work with you and your budget to bring you the best professional moving services for you and your residential or commercial move.