So we have high demand, but inflation is working on prices at the same time. An economist would explain that what is happening is that the value of the dollar is decreasing, so everything denominated in dollars just seems to be getting more expensive.
But that's not the experience of inflation. I don't look at a dollar bill and think “This is worth less.” What I see is my Blue Bottle cappuccino now costs $7 with tip and I can't leave my house without spending at least a hundred bucks.
So there is increasing demand, and inflation is pushing up prices. And these aren't separate phenomenons…the increases compound themselves, and each other.
This is why homebuyers are getting increasingly frustrated - homes are not just out of reach but are becoming progressively MORE out of reach as time passes. And those increases are accelerating.
And the overall effect for both buyers and sellers is…I can't believe what houses cost.
Amazingly, two days ago our Fed chairman said that as many as three interest rate cuts are likely this year. That will only increase demand, and some say inflation too.
Here's the thing: Inflation is here to stay. It's the stated purpose of the Federal Reserve. And I think demand is here to stay too. Separate or together, prices will continue to rise.
