Prices After COVID
There have been massive price increases across the board as a result of the Pandemic. “Inflation is here,” says Michael Norton, Senior Vice President of Investments at David Lerner Associates, “and the prices of certain assets are climbing quickly.”
The price of houses has seen a ridiculous spike across the nation as people strive to better their home offices and spaces. Covid caused folks all over the globe to retreat into their homes and work from converted garages and lofts or dining rooms. Seeking a bigger better place to live in has resulted in a low inventory of houses and vehicles. This in turn has led to an unprecedented bump in the price of homes and cars.
Homes in Florida, Connecticut, and New Jersey have seen a huge bump in the price of properties compared to a year ago. According to Zillow, Florida and New Jersey have had more than an 18% year-over-year change, while Connecticut has seen a 21% increase in home values. Limited inventory mixed with loads of interested buyers caused the price hikes. Bidding wars have become common when it comes to buying a new house and many folks have lost out on their dream home.
It wasn’t just homes that shot up in price. Cars and trucks have jumped higher than anyone could have imagined a short time ago. The average price paid for a brand new car hit as high as $42,000 in June. That is approximately $4,000 more for the same product in the relatively short space of one year. It isn’t just new cars that are more expensive. The used market has also seen an unprecedented increase. Compared to the same vehicle at the beginning of 2020, older used cars now cost thousands more. Research shows that the average cost of a used car increased by around $6,000 between the beginning of 2020 and June 2021.
Food prices also shot up in some instances. When Covid struck us in the United States we saw outbreaks in a number of U.S. meat processing plants. This caused a domestic meat shortage. A shortage means there is less supply and the laws of supply and demand came into effect, causing an increase in demand for imported meat. When that happened imported meat prices went sky high. America saw the largest 1-month price increases for imported meat since the price index was very first published in 1993.
“All these elements, combined with natural inflation after flooding the economy with stimulus money, have created a financial situation worth keeping an eye on,” says Norton, “we are working with our clients to help them prepare their retirement savings in case of an economic downturn”
Experts suggest prices should stabilize once we return to normal, but it will take time. In the meantime, we are stuck with higher prices and shortages in supply which will keep the prices at these levels for a while to come.
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