The Huntsville Area Association of Realtors’ (HAAR) Economic Report for Q1 2022 illustrates the rapid inflation that has hit all aspects of American economic life. The rate of inflation hit 8% in March, a four-fold increase since that month the previous year.

With the 8% inflation rate far outstripping the approximately 2% increase in median household income for 2021, it appears likely that economic distress is causing those looking to purchase a home in the $250,000 range and below to hold off on buying. Inflation, after all, affects every aspect of the economy. According to the U.S. Bureau of Labor Statistics, for the month of May, the price of gasoline jumped 48.7% from the previous year, electricity by 12%, and food products such as meat, poultry, eggs, and fish saw an increase in price of 14.2%

Put simply, those with the means to more comfortably endure the conditions of sharp inflation are the ones best positioned to buy a house at all, and they aren’t looking to buy in the $250k range.

The Economic Report shows that homes priced in the $300,000 – $350,000 range experienced a sales increase of 65% over that year, while sales of homes in the $250,000 and below range dropped nearly 50%.

The Huntsville Business Journal has previously reported on the particular pressures of a rising population and a limited inventory helping to drive up prices in Madison County. A new report from the National Association of Realtors provides further evidence of pandemic conditions disrupting housing inventory nationwide. According to the National Association of Realtors’ 2022 Members’ Profile report, 57% of realtors cite limited inventory as the leading factor in limiting potential clients from purchasing a home.

What remains to be seen is what will happen when the previously-clogged supply of real estate inventory is introduced to the market. Will the reduction of supply pressure bring prices down? Will the growing demand for high-skilled, technical workers in Madison County result in previously inexpensive areas seeing a price increase due to the ability of these new residents to pay higher prices? Will those two factors cancel each other out, leading to a more gradual rise in housing prices commensurate with Huntsville’s rising prominence? Will rising prices for construction materials and other factors restrict the production of real estate inventory once more?

Only time – and the imminent release of the HAAR’s Economic Report for Q2 – will tell. The Huntsville Business Journal will keep its readers informed of future analysis.