The Fed, and the market at large, has been anxiously waiting for inflation data to show that their quantitative tightening project has been having the intended effect. October’s Consumer Price Index (CPI), one of the two key inflation reports in the US, came in much better than expected yesterday. This sent waves of optimism through the market, and subsequently, mortgage rates saw the largest single-day drop since daily rate recording began in 2009, from 7.22% on Wednesday to 6.62% yesterday. Big news.
YoY comparisons were bound to decline since inflation has been up for more than a year. I am a real estate agent in Oregon, and the irrational exuberance over the highly manipulated CPI data is shocking. So, will home prices accelerate again if mortgage rates drop and inflation declines? Or are we heading into a recession? Or is the Fed still planning to raise rates, but inflation isn't an issue? My rent has increased by 10% each of the last two years and will increase by 14.6% next year, thanks to an Oregon law that caps rent increases. A law that has only motivated landlords to increase the maximum amount possible. When I go to the grocery store, my bill is still growing, just like gas prices. Let's say inflation stops cold where it is now, which locks us into very high prices. What then? Does everyone deal with high prices? In my real estate market, more than 50% of active listings have had price decreases, but the pending and sold properties are still at higher prices than they were a year ago. Watching the myriad of mortgage brokers I know behave like now everything is fine is something else. For buyers and sellers with the means to shrug this off, everything is business as usual. But what about the middle class? Candidly, I am growing weary of all the attempts to paint heavily manipulated numbers as good news.
Nice article, highly good points - namely when does something that seemed expensive start to look cheap...
YoY comparisons were bound to decline since inflation has been up for more than a year. I am a real estate agent in Oregon, and the irrational exuberance over the highly manipulated CPI data is shocking. So, will home prices accelerate again if mortgage rates drop and inflation declines? Or are we heading into a recession? Or is the Fed still planning to raise rates, but inflation isn't an issue? My rent has increased by 10% each of the last two years and will increase by 14.6% next year, thanks to an Oregon law that caps rent increases. A law that has only motivated landlords to increase the maximum amount possible. When I go to the grocery store, my bill is still growing, just like gas prices. Let's say inflation stops cold where it is now, which locks us into very high prices. What then? Does everyone deal with high prices? In my real estate market, more than 50% of active listings have had price decreases, but the pending and sold properties are still at higher prices than they were a year ago. Watching the myriad of mortgage brokers I know behave like now everything is fine is something else. For buyers and sellers with the means to shrug this off, everything is business as usual. But what about the middle class? Candidly, I am growing weary of all the attempts to paint heavily manipulated numbers as good news.
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