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> I don't see how raising interest rates will help when the core issue with housing is the lack of supply. why did this become a issue last 2-3 years. I don't

> I don't see how raising interest rates will help when the core issue with housing is the lack of supply. why did this become a issue last 2-3 years. I don't understand this at all. Re raising interest rates will crush demand via job losses, foreclosures, dissuade flippers and property speculators.

wavesounds 3y ago
Because of the pandemic which caused people to desire more space. Maybe they were living with their parents or roommates and want their own place, maybe they had kids during the pandemic, maybe they need a home office. Sure if you raise rates enough to cause a recession and massive job loss that would eventually push home prices down but it seems like building more housing would be a simpler, kinder solution.
- lumb63 3y ago
  That’s the importance of having a unified approach, shared between the government and the Fed. It doesn’t help inflation when the country is running all-time-high (or close to it) deficit levels, especially if that money isn’t being appropriately allocated.
pc86 3y ago
> Re raising interest rates will crush demand via job losses Raising interest rates doesn't automatically lead to layoffs and businesses closing. It certainly might for faltering or weak companies, but it's not like x% interest rate increase === y% unemployment increase or z% business closure. > foreclosures Sure, if you have an adjustable rate mortgage, are massively underwater, and can't afford the new payments. That in and of itself is not a bad thing - if you couldn't afford the house five years ago at 4.5% fixed rate, you couldn't afford it at a 3% ARM either. There's no reason to think an increase in foreclosures would be anywhere close to 2008 levels simply because rates are increased to more historically reasonable levels. > dissuade flippers and property speculators Good.
fear_and_coffee 3y ago
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wavesounds 3y ago

Because of the pandemic which caused people to desire more space. Maybe they were living with their parents or roommates and want their own place, maybe they had kids during the pandemic, maybe they need a home office. Sure if you raise rates enough to cause a recession and massive job loss that would eventually push home prices down but it seems like building more housing would be a simpler, kinder solution.

lumb63 3y ago
That’s the importance of having a unified approach, shared between the government and the Fed. It doesn’t help inflation when the country is running all-time-high (or close to it) deficit levels, especially if that money isn’t being appropriately allocated.

pc86 3y ago

> Re raising interest rates will crush demand via job losses Raising interest rates doesn't automatically lead to layoffs and businesses closing. It certainly might for faltering or weak companies, but it's not like x% interest rate increase === y% unemployment increase or z% business closure. > foreclosures Sure, if you have an adjustable rate mortgage, are massively underwater, and can't afford the new payments. That in and of itself is not a bad thing - if you couldn't afford the house five years ago at 4.5% fixed rate, you couldn't afford it at a 3% ARM either. There's no reason to think an increase in foreclosures would be anywhere close to 2008 levels simply because rates are increased to more historically reasonable levels. > dissuade flippers and property speculators Good.

fear_and_coffee 3y ago

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