Do not expect lower Inflation, Housing market will fuel it soon

14 sept. 2021

The median sales price of existing homes in the US: increased+19.5% in the first half of 2021


The homeownership rate in the US decreased from 67.90 to 65.40% between April 2020 and April 2021, but prices jumped 20% in the same timeframe.


Max sales volume Oct 2020 - Jan 2021: during the correction in prices


Homeowner Vacancy Rate in the United States: lowest in the past 65 years:


The rent cost for tenants increased 3.2%/year in the past decade! sofar it is increased +1.17% in 2021.



The biggest wildcard for U.S. inflation over the next year doesn’t come from used cars or airline fares. Instead, it is housing.
Officials at the Federal Reserve and the White House have highlighted what many forecasters expect will be the temporary nature of elevated price readings stemming from the reopening of the economy following pandemic-related restrictions.(WSJ)


Economists say rent is one area that is not yet showing strong gains, but it could become one of the more persistent factors in higher consumer prices.
Rent and owners’ equivalent rent cover housing costs and are about a third of CPI. Inflation in rent is stickier and more persistent than other price pressures. In the CPI, rent rose slightly slower in July than in June.

“The rent component is dramatically understated relative to reality, which means in the next couple of months, rent is going to catch up,” Bleakley Global Advisors chief investment officer Peter Boockvar said. “Rental increases, which is the biggest chunk are only going to accelerate here. I don’t see rent increases as transitory.”

Boockvar said the Apartment List National Rent Report showed a rise of 2.5% in rental prices from June to July and an 11.4% increase for 2021 so far. (CNBC)

Conclusion:
I believe these data clearly show it is very unlikely we see a housing market crash, but we are going to see a higher cost of "Rent" for tenants and higher homes prices in the coming months!

This will lead to higher Inflation rates in long term..!

While many think these inflation rates are temporary, I believe the deceleration (last month) is temporary..!

14 sept. 2021

Note

Rising inflation has an insidious effect: input prices are higher, consumers can purchase fewer goods, revenues, and profits decline, and the economy slows for a time until a measure of economic equilibrium is reached.
Value stocks perform better in high inflation periods and growth stocks perform better during low inflation.
When inflation is on the upswing, income-oriented or high-dividend-paying stock prices generally decline.
Stocks overall do seem to be more volatile during highly inflationary periods. (Investopedia)