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by nemo44x
1784 days ago
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So I do wonder where the equilibrium is between inflation and raising interest rates. That is, inflation gets to a point where homes double in dollar value over a few years but interest rates go much higher creating a situation where anyone with an existing, low rate mortgage is making pretty easy payments (due to inflation and therefore wage inflation) but the real value of their house hasn't really gone up in value due to that same inflation. Would end up with a win-win situation for existing and future home buyers as opposed to a situation where rates go up but inflation does not which would crust millions of existing home owners and probably lead to regime change, making it political unviable. Orchestrating this is the difficult part as it couldn't happen over night. But rather as inflation begins to take hold and we see increases in wages, interest rates rise slowly enough to let the housing market avoid collapse. |
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Situations like this are not always bad... This generally will lead to more Home Improvement, and people investing in their homes making them better then dumping them on the market. I find that personally to be better for society instead of letting whole neighborhoods die due to people letting properties run down then moving when the maintenance gets to expensive.
Also inflation does not always track wages. Especially for the middle class. We are seeing that right now in some sectors, where skilled labor rates are more or less flat for the last few years (when adjusted for current inflation may even be dropping) however unskilled labor has seen pretty significant gains recently.