Four causes of inflation that impact real estate

Published Sept. 30, 2021 | Updated Nov. 10, 2022

The U.S. Department of Labor defines inflation as “the overall general upward price movement of goods and services in an economy.” When we wrote our inflation piece in the summer of 2021, many economists and politicians were characterizing inflation as transitory. A year later, inflation has started to take hold in key areas of the market which will have an impact on how real estate investors should view their current and prospective investment. The annual inflation as measured by the Consumer Price Index (CPI) has been 7.5% or higher since January of this year, peaking at 9.05% in June.

The U.S. economy shrank the first two quarters of 2022 but expanded in the most recent quarter. A surge in demand often leads to consequences such as inflation as well as labor and supply chain pressure. We parsed through the data to understand the level of inflation concern pertinent to various stakeholders in real estate — from occupiers and users to developers and investors. 

Continue reading about the four causes of inflation that impact real estate for further insight into how these causes influence real estate users, their behaviors, supply and demand balance, and capital markets. 

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.