U.S. home prices rose by 18.8% in 2021
Raising interest rates high enough to put a dent in the housing market would throw the rest of the U.S. economy into recession first.
Sixty-five percent of American households own their homes. Stocks and bonds are held primarily by the rich, but it's home equity where the middle class has its wealth.
And right now that wealth is booming, having risen by more than one trillion dollars each of the past three quarters. At the peak of the mid-2000's housing boom that number was more like $450 billion a quarter.
Taking out a home-equity loan at a rate of 4% or 5% to support higher spending when your income is being squeezed by inflation might not be the wisest decision, but it's still a much lower borrowing cost than a credit card.
And for a middle-class household that's gained $100,000 in home equity over the past couple years — not an uncommon scenario in much of the country — it's easy to see the appeal.
Our dysfunctional, stagflationary housing market is turning into a relentless wealth-generation machine for homeowners. That’s going to make it much harder for the Fed to rein in the expanding spending that’s pushing inflation higher.
Conor Sen Bloomberg 8 mars 2022
Record number of U.S. properties are now worth $1 million or more
The percentage of homes nationwide that are worth at least seven figures has nearly doubled since the start of the pandemic
MarketWatch 14 March2022
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