Fed's inflation fight tightens the U.S. housing supply and makes home buying even more difficult.
Conventional wisdom dictates that U.S. inflation will continue to decline as the Federal Reserve marches forward with additional interest-rate hikes. This action, which makes loans more expensive for businesses and consumers, should lead to less spending, less consumption and higher unemployment.
The case for this condition to persist , which the market is mostly failing to consider, continues to grow stronger as the odds of a recession fade. This should be an alarm bell and a potential opportunity for investors to redeploy at least part of their capital into hard assets to serve as a hedge against inflation risk.
In fact, the only relevant argument in the recession camp that remains is the Fed continuing its aggressive posture against inflation — now considered the fastest monetary policy tightening cycle in more than 40 years. Such action continues to lead many to speculate that recession is imminent, and the only questions left to answer are “when,” and “how deep it will be?”
The high estimate of the country’s current housing shortage is pegged at about 7.3 million units, while the most conservative estimate shows it to be about 1.7 million. While the true shortage is most likely somewhere inbetween, the bottom line is that the United States faces a textbook housing shortage that cannot be solved overnight. Worse, the Fed’s current policies are making the prospect of home ownership even more difficult.
With housing assets so closely tied to inflation, as well as to the laws of supply and demand, investments in this hard asset class deserve due consideration. Strong economic growth, coupled with the one-two punch of resilient consumer spending and near record-low unemployment, is good news. It also means the Fed won’t be lowering rates soon. Housing will remain a key driver of inflation, and future rate-hikes will further entrench homeowners and push more would-be buyers into renting.
Deutschland Neuesten Nachrichten, Deutschland Schlagzeilen
Similar News:Sie können auch ähnliche Nachrichten wie diese lesen, die wir aus anderen Nachrichtenquellen gesammelt haben.
Prescott-area homeowners getting dropped, not renewed by insurance providersHomeowners in northern Arizona are being dropped or not renewed by their insurance companies partly due to wildfire risk. It’s a growing trend we’re seeing across the country.
Weiterlesen »
Norfolk Southern to start compensating homeowners for Ohio derailment By ReutersNorfolk Southern to start compensating homeowners for Ohio derailment
Weiterlesen »
Elias: California housing costs worse for homeowners than rentersTenants could actually benefit from an increase in mortgage holders becoming landlords to make ends meet.
Weiterlesen »
South suburban homeowners considering flood insuranceCBS 2 has been on the ground since Sunday when devastating storms caused severe flooding in Calumet City and surrounding areas. CBS 2's Andrew Ramos reports.
Weiterlesen »