Yes, the damage is done at this point. The speculative frenzy is what drove the price increases, and it should've been short circuited early last year. Prices

Yes, the damage is done at this point. The speculative frenzy is what drove the price increases, and it should've been short circuited early last year. Prices will be stickier than rising rates increases affordability. But at this point it has to be done. Increasing buying power makes inflationary pressures worse, not better. Higher rates will kill the psychology/speculative aspect of rapid price increases. And the Fed is acting far too late. The yield curve is about to invert as investors think that Fed hikes will lead to a recession. They have to do many of them and fast to get inflation under control, which will very likely lead to a bust. Every time in US history that inflation has been over 5%, a recession followed when the Fed took necessary measures to bring it down. It could've been a smooth landing if they had started long ago and done them in slow increments with moderation. Yet they kept emergency level money printing and rates in place for two full years, far after the acute crisis had passed. A recession would basically undo a lot of the quick recovery/good that the fiscal spending brought about. But seems too late to avoid if the Fed is serious about inflation and doesn't let it run unchecked like the 70s. Though it's pretty apparent to me that prices will come down considerably if mortgage rates were to rise 2% in a short period of time. Which may just happen in the end... We'll see. Only ~10% of homeowners have moved at these prices levels, so there are many with much higher equity levels that would be willing to sell for less in a slow market.