It seems that all indicators of inflation are down to normal level except housing. This data is from real time inflation measurement website Truflation. Mind that they calculate housing inflation in real-time, not like the FED with 1 year lag. https://truflation.com Do you think FED will need to raise rates higher to kill stubborn housing inflation?
Isn’t housing is more dictated by supply and demand rather than only inflation.
There is also the summer/spring spike in prices. Which was affected by the rate hikes, pushing potential buyers to buy early summer in light of more hikes. Those that can afford to buy don’t care.
People are biased against government housing due to Public Private Partnerships basically ruining government programs for the past 30 years, but many NYC and other metro city livers want to get into government housing for the stability, etc. So when I say this, don't discredit it: The real biggest reasons for why we have housing issues is that it is illegal in most of the US to build duplexes anymore or god forbid apartments. And that since 1992 or so we haven't built any federal housing in the US and so supply is down something like 10m housing units (incl. Apartments, etc.) Then where it should have been if we kept pace with 1990 and before rates.
“Killing” seems a bit hyperbolic. There are lots of considerations. Why can’t corporations be incentivized to open offices or corporations in more rural areas? Maybe that would relieve some pressure from Bay Area home prices. I’m sure there can be many other options, just no real incentive to make change.
We don’t want your corporations. That’s why we live here.
I agree with you but a lot of time what happens is they move in then make everything more expensive for the locals. If done correctly and with state/city/county government oversight (for example, not pushing people out of their homes just to build an office or not taking up valuable space needed for recreation activities and farming) then this might go well.
Raising rates further won’t matter so much when there are more cash buyers than ever and foreign (Chinese) “investors” are coming and buying up land.
Op decided to wait for the “housing crash”.
OP isn’t talking crash but inflation.
The recession will kill it
Raising interest rates won’t kill housing inflation. It makes it more expensive for developers to get financing to build. It also makes mortgage rates higher for home buyers (though this is not factored into US inflation numbers, only rent counts for CPI)
Wrong. New residential construction is relatively constant. Homeowners won’t sell because they have only partial equity and cheap loans that they don’t want to replace with more expensive ones
Housing is expensive because of regulations, zoning laws, school funding formulae that concentrate property taxes in small locales, foreign investors, large real estate investors in general, etc. The unaffordable housing problem can be solved in any number ways other than raising interest rates.
This is what happens when you artificially restrict housing supply via zoning, NIMBYs, etc. Why are people surprised? People who want their property values to go up are the sole problem.
We will get atleast 1 more rate hike this year before the fed pauses
That’s just a seasonal cycle trend is downwards.
Trend is upwards. The first derivative of the trend is downwards. Don't be fooled by the disinflation narrative. It still means the price is growing, just growing slower.
I’m expecting they’ll continue saying disinflation even when it’s deflationary. One can peg it relative to a frame of reference where the deflated amount is still above the start and thus inflated. Negative disinflation FTW!