Home-flation accelerated notably in mid 2020 as the massive home-buying spree began combined with low interest rate financing. People flocked to areas that were cheap compared to where they were coming from and paid up for instant gratification. Wealthy people armed with low interest rate financing, additional saved cash from tax savings bought second and third homes, investment homes, etc, depleting stock for those seeking a first time, affordable home. The FED's (late) response has slowed the economy and helped bring inflation down notably. But just like some medications cure some things while damaging others, so too will this period of higher rates continue to do damage to the housing sector.

Unlike other periods when rates were hiked to slow the economy (those were times when there was too much construction) and reduce excess inventory. This period, rates were hiked even though we were grossly undersupplied in many areas.....and still are. Higher rates have made new home construction unviable in many classifications, predominantly in the areas with the lowest supply.  Construction is slowing notably at a time when it should be increasing. Getting a construction project from start to delivery can take a number of years, and it is highly likely that by 2026/27 we could have an even more acute shortage of homes. Add in aging housing stock, new demand, people living longer and aging in place, weather-related replacement, etc and the situation becomes quite dire.

Tariffs on imported home-building products? Inefficient, ineffective immigration policies and procedures and work permitting of the labor that builds homes? Overly-complex-regulation? Slow, inefficient local building departments? Outdated, impractical zoning? Weak infrastructure? Politicians distracting the planet with issues that have zero impact on day-to-day issues? One day we'll look back at this period to blame those whose actions - or lack thereof - will make renting or owning a home even more difficult and expensive. Un-necessarily. When will we revert to common sense instead of blind ideology? Naturally, the finger-pointing will ensue. But yes, there are solutions, and yes, one would be to lower rates so that the construction cycle is not interrupted too badly. If we rely purely on recent memory, we know clearly what supply disruptions deliver.