After what seemed would be a never-ending foray of lockdowns and strict social distancing measures, the world has turned the corner from the pandemic and has returned to a new type of normal. However, not all industries and businesses are thriving as they once were. Effects from macro-economic factors such as rising interest rates due to inflation and Russia’s newly waged war on Ukraine have resulted in supply chain issues and disruption across multiple industries.

So how does this affect the Napa Valley real estate market? There are trends to look out for that will impact buying and selling, and in this article, we’ll cover the top three to look out for.

Rising Inflation Equals Rising Interest Rates

As mentioned previously, the effort of the Federal Reserve to rein in inflation has finally kicked into high gear after over a decade of historically low rates. Fed Chairman Jerome Powell has repeated several times that he will not hesitate to do what is necessary to extinguish inflation. This, of course, means interests will expectedly rise throughout 2022 and possibly, into 2023. So what does this mean for someone who has just hired a Napa realtor to buy or sell their Napa Valley real estate? First, rising rates reduce sales volume, and prices typically increase whenever there is a sudden lack of supply. Furthermore, other costs, such as building materials and utilities, have also risen sharply, adding to the overall price hike.

A Robust Rental Market

A recent study from Zillow Research showed that home prices would continue to rise in 2022 by 11% on average. Unfortunately, while this price increase is an excellent sign for sellers, it’s rather bad news for many young families that are effectively being priced out of the market. This, coupled with more employees working anywhere in the world “from home,” points to a healthy influx of families and individuals seeking rental properties. As a result, the vacancy rate will tighten to 4.8% in 2022, according to the National Association of Realtors.

Increased Demand in the Sunbelt

Big cities are no longer “the place to be,” at least not if you aim to call that place “home.” For example, more than half (56%) of U.S. homes built in December 2021 were located in the South, a staggering difference from the 3% of homes sold in the Northeast. Granted, homeowners wanting to live in friendlier climates is nothing new; however, COVID can be credited with accelerating this trend as younger generations of workers begin to place greater importance on the quality of life and happiness.

Stay One Step Ahead

While there are signs of volatility across all sectors, the Napa Valley real estate market can still produce unique opportunities for buyers and sellers. If you need an experienced Napa realtor to help you navigate the market and stay ahead of the trends, contact Connie & Jamie today!