The data in this graph comes from the Case Shiller Home Price Index going back to 1970.
It’s inflation-adjusted. Meaning that it measures the cost of Homes compared to other goods/services in the economy.
Making it an apples to apples comparison for Home Prices across time.
— Nick Gerli (@nickgerli1) November 14, 2022
This where slowing Inflation is actually a big problem for the Housing Market.
Because many real estate investors and homeowners were counting on huge levels of inflation going forward to justify current price levels.
It doesn’t look like that’s going to happen.
— Nick Gerli (@nickgerli1) November 14, 2022
And perhaps the biggest impact of declining Rents is on real estate investors.
Their revenues/incomes are now declining just at the moment that the Fed is aggressively increasing their cost of borrowing (aka interest rates).
Recipe for a massive investor firesale.
— Nick Gerli (@nickgerli1) November 14, 2022
Federal Reserve Alert! Fed Vice Chair Michael Barr testifies at Senate Banking Committee: “I think that it is the case we are going to see significant softening in the economy,”
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