How Will Rising Interest Rates and Inflation Affect Property Sales?

In the current market, real estate owners are dealing with the consequences of rising inflation and interest rates. With both numbers at their highest point in several decades, property sales are still seeing peak numbers this summer. The median sales price on single-family homes rose 6.6% in 2022, and rent prices peaked at 5.81% this June.  

Discover more about rising interest and inflation rates and how they might affect your property sales and rental income as an investor in the New Orleans area. 

Rising Inflation and Interest Rates

According to the Bureau of Labor Statistics, inflation has risen 9.1% over the past 12 months. Food increased by 10.4%, and energy costs skyrocketed 41.6% in the same period. Additionally, gas prices hit 59.9% inflation over the last year. 

The World Economic Forum reported that the U.S. The Federal Reserve made the highest interest rate increase in nearly 30 years, to between 2% and 2.25% in June. The Fed increased interest rates to keep up with inflation, decrease borrowing, and stabilize the economy. 

How Rising Rates Affect Property Sales

While inflation negatively affects consumers’ ability to purchase single-family, stand-alone homes, it may offer real estate investors more profits on rental properties like condominiums.

According to Forbes, real estate investments have historically seen increased profits during periods of high inflation. For example, there is less competition due to fewer construction initiatives, and properties tend to increase in value to keep up with inflation. If you already own a property or are considering investing, now may be a beneficial time to invest. 

Rate Increases and Potential Rental Profits

The increase in mortgage rates may also be beneficial for investors. The Washington Post reports that rents increased 11.3% over last year, making owning a rental property a potentially lucrative endeavor. 

Property sales are still high but may decline due to rising mortgage rates. With fewer people able to borrow and own a home, they’ll be looking to rent instead. If you own a rental property, this trend can help you see an increase in rental income.

Increasing Rental Income With Property Management Services

In the current market, you can capitalize on increasing rental prices and efficient property management to increase your rental income and invest in new rental properties in the New Orleans metro area.

Certain Management offers professional property management in New Orleans. We provide administrative, financial, and property management services for your rental properties. Our condominium management in New Orleans focuses on maintaining your multi-family rental properties and helping you boost your ROI, regardless of the current market. 

Outsourcing your property management tasks to a reliable, professional company like Certain Management can help you maximize your rental income. Contact us today to discuss your property and how our services can benefit you and your tenants. 

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