[mitthrowaway2]

Indeed, it's a terrible situation. If it does not crush the bubble, it will be interesting to see how it plays out. At higher interest rates, shelter becomes an ever increasing component of core CPI growth. There's about another year remaining before this feedback loop makes itself impossible to ignore. Otherwise, non-shelter prices will have to drop quite significantly for inflation to moderate with such pressing increases in rents and mortgage interest. But that would be indicative of a recession, which would put many mortgages in jeopardy. It could also lead to a populist anti-immigrant backlash, which might reverse the only bullish fundamentals for housing.