So it looks like a lot of remaining inflation is rent. In that case, wouldn't you want to lower rates to increase home-building and home-ownership in order to reduce rent pricing?
@ZachWeinersmith realistically interest rates do not benefit affordability by the masses. If they're low, properties are bought up by those with capital. If they're high, they are rented at exorbitant rates.
We need laws that discourage and tax multiple ownership. Then use those taxes to subsidize housing costs.
Instead the US further reinforces its poverty class system.
@ZachWeinersmith Banning investment companies from owning single family homes, or multiple apartment buildings, would make a much bigger difference much faster.
@ZachWeinersmith Robert Reich just posted a short YT explainer about how hedge funds started hoovering up single family homes during the 08 mortgage crisis, and they're the ones primarily driving the increase in housing costs. There is a bill currently in the Senate to address the issue... Call your senators! https://youtu.be/q9TOGxDJ0TE?si=yfqwAbWXY_GlNRYv
(Also lowering interest rates, but we have to keep investment banks from hoarding the supply)
@ZachWeinersmith Let me weep in your general vicinity about the state of zoning in areas where rents are high. :(
A lot of cities seem to be taking the "discourage people from moving here" tact rather than the "build more housing" tact and it makes me very frustrated! Unfortunately, because a lot of people's wealth is tied up in the value of their homes, they have an incentive to discourage new home construction.
@ZachWeinersmith breathable air now requires a variance that must be granted by City Council after a community design review scheduled with the neighborhood Registered Community Organization (RCO), which is required for Zoning Board of Approvals (ZBA) review, which must happen after a review by the historic commission and the art commission.
Also if the parcel in question hasn't been updated in the city's land records database your review will be rejected. There's an 18 month update backlog.
@ZachWeinersmith who would want that? Insane rents not only generate quasi-guaranteed revenues compared to anything else, they also drive the property value up. Due to how it grew, a lot of people’s retirements depend on it, and depend on it keeping growing.
@ZachWeinersmith I think that'd increase demand further on an already low supply. We simply have a lot of supply side shortages in materials, workers, and prime land legally zoned for cost effective improvements that we need to address before subsidizing demand further (via lowering rates or rent controls) can make much of a difference.
@ZachWeinersmith In isolation, maybe. In practice, lowering interest rates has other effects. Also, it would take years--home-building is not generally an overnight thing. And home ownership is bad for society, for many reasons. (No, I wouldn't say provocative things. What gives you that idea?)
@ZachWeinersmith
Who is "you" in that question, and are they even interested in reducing inflation?
Assuming "you" is your government/Fed (who else would be in the position to lower rates), isn't inflation good for them (as long as it's not hyper-inflation), because it reduces the value of the national debt and increases income from sales tax?
@ZachWeinersmith yes. Lowering rates reduces mortgage carrying costs, less expense to be recovered by rent.
And no. Lower rates reduces mortgage carrying costs, making larger mortgages more attractive and causing more money to chase the available properties or construction driving up prices .
Govts have to work hard at ensuring supply will increase. It can't really be done just with rates. Or even just with money. It requires legislative, policy, and direct action. Like... building housing.
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