One of my finance professors in college named housing best hedge against inflation and I never forgot that.  He said tangible assets like real estate, gold, silver, etc. retain their value as the dollar is devalued due to inflation.

Construction Costs Going Up

In fact, as inflation heats up, the cost to build new construction only goes up. Because our market has been under-supplied for years, we are forced to build our way out of this. The only thing that could change the equation is if demand slowed.

Demand has slowed somewhat due to rising interest rates and insurance costs. Consequently, inventory has risen the past several months, and this should temper price increases like we’ve seen the past two years.

Whether home prices will appreciate or decline slightly no one can say. What we do know is the stock market has been volatile and has mostly headed down in 2022. Real Estate may be a much safer play in the short run, and the long run.

Housing Best Hedge Against Inflation

As you can see by the chart, since 2000 real estate has outperformed inflation. This includes the real estate crash years in 2006-2009. While searching the Internet I found more data dating back to 1967 that shows real estate outperformed inflation as well.

We May Already be in a Recession

Many people say the US will enter a recession in 2022. Others believe it will be 2023, and still others believe we are already in one. Negative growth impacts stocks, and as such we have seen a pullback in stock prices. When the Fed raises interest rates it is not usually good news for Wall Street.

Rising rates can dampen home affordability, and therefore it can have a negative impact on real estate prices short-term. We still believe now is a good time to buy before rates go higher. We did a video on our YouTube channel ( which shows how waiting to buy in hopes prices will come down actually costs a buyer when rates increase.  Send me an email if you’d like a direct link to that video

Whatever happens with real estate prices in the short run it should be less volatile than stocks and should protect against inflation. The other nice thing about real estate is you can live in a home; you can’t live in a stock. You can rent out a home for income when you are not using it.  Real estate has so many advantages over stocks, including some tax deductions.

Is Your Home Working For You?

If you have a home that’s not quite working for you, now may be a good time to sell. Real estate prices are strong and while inventory is growing, it is still a good time to sell. If you wait to sell, you are occupying a home that doesn’t quite work for you, and it may be harder to sell when more homes enter the market in the future. Not to mention, interest rates could keep climbing.

As interest rates climb less and less buyers qualify for your home. If you are getting a loan on your next home, it may cost you more in the future. Interest rates have held steady the past week or so waiting on direction from the Fed at next month’s meeting. The inflation outlook will dictate how that goes, and we are expecting another rate increase in June, and perhaps several more this year. Either high prices will slow this economy down, or high rates will. It may be a combination of both, but rest assured the Fed will slow down the economy to get inflation under control.

The question is, will they overshoot and put us into recession? The other question is where is the best place to put our money in uncertain times.? Real estate may be a good option, and now is a good time to get into the right real estate for you.

Always Call the Ellis Team at Keller Williams

To get your home sold Always Call the Ellis Team at Keller Williams Realty 239-310-6500 or visit to search the MLS, or to get your home’s value instantly. Our marketing reaches more buyers, which brings more offers.

Good luck, and Happy Memorial Day Weekend!

How does Inflation and recession Affect Housing?

We just pulled new numbers from MLS and found that housing inventory grows most in the higher price ranges since March.

Overall single-family home market inventory in Lee County grew to a 1.18 month’s supply, up from .82 month’s in March.  Where we see the most differential between the two graphs is in the $300k price and up. Housing inventory grew the most as the prices go higher. The spread in each subsequent price range grew higher.

Housing Inventory Grows Most in Higher Price Ranges
May 2022

This explains why we are seeing price reductions again in the housing market. Some sellers got a little ahead of the market, and that was OK while the market was rising rapidly. Today, the market is price sensitive again. Sellers must be priced correctly in this market.  Competition from other sellers is coming as more listed properties hit the market each day.

March 2022 housing inventory
March 2022

It is still an excellent time to sell your home, but you must be competitive in the market. Overpricing your home in this market may not accomplish what you want.  We are not saying prices are headed down. That would depend on how many more sellers choose to list compared to how far and fast interest rates rise and how that affects demand.

Marketing and Pricing Crucial

What we are saying is marketing your home extensively and pricing it correctly are critical. Gone are the days you can just list it in MLS and post on some portal websites and it will sell. To receive Top Dollar, it takes marketing and correct pricing. especially when housing inventory grows most in higher price ranges..

If you follow this advice, we think you will be happy with the result. Sellers that do not do this will not receive top dollar for their home, and worse, might miss the market altogether.

The Ellis Team has been through changing markets many times in our career.  If and when the market does change, there will be some sellers that look back on 2022 and kick themselves because they missed one of the greatest opportunities in their lifetime.

Maybe the market isn’t as hot as it was 6 weeks ago, but it is still excellent. Throughout the history of real estate markets most sellers would kill to have a 1.18 month supply of homes on the market as competition. This is an opportunity for current sellers, and perhaps those wondering when the market would top.

We cannot say for certain if the market has topped and where it will go from here. Rising inventory levels and price reductions tell us it has at least paused, which markets sometimes do. Markets don’t always go up or down. Sometimes they meander awaiting direction from buyers and sellers.

We have so many factors pulling and tugging at this market, and it will be interesting to see which forces win out. Rising rates usually cools the market, as does fear of recession. However, Florida is still a popular destination that many would like to relocate to.

Thinking of Selling?

If you are thinking of selling your home, please reach out to Brett or Sande Ellis 239-310-6500. We can guide you through the market and help you explore your options. We can even help you find your next home which is easier not that inventory is rising. Or visit for a Free instant home valuation online.

If you are looking to buy, our buyer specialists are here to help guide you as well. Just call 239-489-4042 or visit to begin searching the MLS like a pro.

Good luck and Happy Selling!

Ellis Team Weekend Open Houses

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See Listing Inventory Rose 40% Since February published just a few weeks ago. Since that article, inventory has now risen 64% since February.

Is Real Estate a Risky Investment with Inflation and Possible Recession?