Homeowners’ Wealth May Be Shrinking As Price Gains Lag Inflation

Article Synopsis

U.S. home prices are rising modestly, but stubborn inflation is eroding those gains in real terms. Realtor.com data shows listing prices up 0.5% year over year in July, while inflation climbed 2.7%, reducing homeowners’ purchasing power and equity value.

This “equity erosion” limits the ability to borrow, renovate, or profit from home sales. Though housing is often an inflation hedge long term, experts warn that persistent inflation can weaken real housing wealth, as seen during the stagflation of the late 1970s and again in recent years.

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