An interesting perspective I heard recently from a housing developer: rising interest rates may cause housing to get more expensive, not less.
Getting a loan now for developing multifamily or single-family properties is significantly higher than it was last year. That means fewer projects are starting. Rent has already been rising, but may rise even faster next year as new supply dries up.
Single family houses may go down in price -- but we all know that isn't really what people care about if they're buying. They usually care about their monthly mortgage payment. And, obviously, that is likely to go up with raising rates, unless there is a very significant downturn in home prices.
The Fed's primary tool is interest rates -- but while we could use a cooling of investment into bubbly areas (like, maybe tech equities and crypto) -- we still desperately need more investment into housing. It's a shame that they will likely move in tandem and we'll just get less investment in everything.
Getting a loan now for developing multifamily or single-family properties is significantly higher than it was last year. That means fewer projects are starting. Rent has already been rising, but may rise even faster next year as new supply dries up.
Single family houses may go down in price -- but we all know that isn't really what people care about if they're buying. They usually care about their monthly mortgage payment. And, obviously, that is likely to go up with raising rates, unless there is a very significant downturn in home prices.
The Fed's primary tool is interest rates -- but while we could use a cooling of investment into bubbly areas (like, maybe tech equities and crypto) -- we still desperately need more investment into housing. It's a shame that they will likely move in tandem and we'll just get less investment in everything.