PRI Business and Economics Fellow, Wayne Winegarden, discusses inflation and its effect on the housing market with The Ledger’s reporter, Paul Nutcher in “Polk County housing prices increase 30% as mortgage rates increase.”
“You would finally have recovered some kind of affordability from the housing bubble, where you had the huge run-up then the crash, then incomes start up, which is what you want to see,” he said.
Then all of a sudden people’s income gains were negated by inflation, he added.
“It’s not just an inflation story, it’s an inflation story to the extent that the Federal Reserve messed up, kept rates too low for too long; expanded the money supply and monetized federal spending,” Winegarden said. “This helped juice the housing market.”
“You had artificially low rates combined with constraints on supplies, combined with rising demand. That’s not a recipe for affordability.”