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You’re confusing inflation with real prices. Inflation means that the level of prices rises. If house prices rise because local government forbid new constructi
by TheTrotters 8y ago
You’re confusing inflation with real prices. Inflation means that the level of prices rises. If house prices rise because local government forbid new construction then that’s an increase in real prices.
- omgwtfbyobbq 8y agoIt's more complicated than that in coastal California. During the housing bubble, real prices were the same and new home permits were double to triple where they are now. https://fred.stlouisfed.org/series/CASTHPI https://fred.stlouisfed.org/series/CASTHPI http://1mcvsz24yrri2dwocy3w3fsm-wpengine.netdna-ssl.com/wp-content/uploads/2015/09/California-Building-Permits.jpg http://1mcvsz24yrri2dwocy3w3fsm-wpengine.netdna-ssl.com/wp-c... In that situation, relaxed lending standards and easy money from the Fed allowed a ton of money to flow into residential real estate. Even though there's still easy money from the Fed, lending standards have tightened since then, and builders and private equity seem to be effectively limiting supply to keep home prices high.