I suppose that i really need to say something about all this. Housing prices are a direct reflection of the bank credit system which must avoid price declines. Because those prices are exactly what allows credit to be extended in mortgages.
A side benefit of such a system is ongoing stimulus to builders. they have jobs.
If everyone believes consolidated monkey is worth $ 7.00 per share, then no one will sell even when no one will buy. In theory, that can last forever. Of course banks help by fixing deals for their clients to maintain pricing. The volume is low after all.
Understand that worthless penny dreadful like consolidated monkey can be slowly bid up to 7.00 and kept there if everyone plays ball. That today is our whole maturing real estate 'market' It is now waiting for cheap money to generate volume. Oh well.
Case-Shiller Home Price Index Hits Another New Record High
August 27, 2024
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9:45 am
People who want a home but cannot afford one keep watching home prices soar out of sight. The Fed says this isn’t inflation.
Measuring Prices
Case-Shiller measures the price of the same home over time.
Median and average prices have no consistency on number of rooms, square footage, location, amenities, lot size, or quality of construction.
Median and average price are also skewed by a slowing number of transactions heavily influenced by price-insensitive buyers.
Although median price is a poor measure, the rising direction is consistent with Case-Shiller reporting.
The problem with Case-Shiller is timeliness. We are heading into September and Case-Shiller is just reporting June data.
And that data represents transactions from a couple months prior.
Year-Over-Year Index Measures
The average person will look at the above charts and see inflation.
Every member of the Fed plus the typical economist will look at those charts and not see inflation because they have been trained not to see it.
In the blind eyes of the Fed and economists in general, home prices are not a consumer expense, nor are property taxes on home prices.
To this group of brainwashed economists only consumer inflation matters, and home prices are a capital expense, not a consumer expense.
Thus, home prices do not count as inflation and the Fed ignores them.
Fed Mess of Its Own Making
Everyone who had a mortgage in 2021, refinanced at 3 percent putting extra money in their pocket monthly for the life of the mortgage.
This adds to price pressure on goods and services.
I have commented several times before that the Fed has no solution to the mess it made other than time. So the Fed doesn’t talk about it.
Fed Does Not Seek or Welcome Further Labor Market Cooling
Meanwhile, please note The Fed Does Not Seek or Welcome Further Labor Market Cooling
On August 23, I noted the market is cheering the Jerome Powell’s self congratulatory and market friendly speech at Jackson Hole.
Powell had praise for how the Fed reduced inflation without bringing too much misery to unemployment.
Instead of blaming monetary and fiscal policy for inflation, Powell blamed supply chains and energy.
“Your mileage may vary,” said Powell. Indeed. Especially those stuck renting and looking to buy a house.
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