What does inflation have to do with the rising cost of housing?

Be very careful with any discussion of inflation with clients
  • One of the hardest prices to nail down is housing. Less than 5 percent of housing changes hands each year, so even if prices are rising at a given moment, only a handful of people pay the higher ones.
  • Land itself is too scarce and costly in most metro areas, and cost-pushed by a large array of development fees.
  • In a commodity like housing, we know for sure that we can overbuild and cause prices to drop, and for equal certainty we can under-build and create an expensive shortage.

The Fed is poised to raise the overnight cost of money (the “Fed funds rate”) a series of times because the rate of core inflation is approaching the Fed’s 2 percent target. What does this mean for your buyers and sellers?