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Surging House Prices Expected to Propel Rent Increases, Push Up Inflation
The inflation rates of rent and owners’ equivalent rent (OER)—the amount of rent equivalent to the cost of ownership—have declined sharply since the COVID-19 pandemic began in February 2020. However, we expect rent inflation and OER inflation to accelerate in the years to come.
Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble
There is growing cause for concern that U.S. house prices are again becoming unhinged from fundamentals.
Newsletter
Higher Home Prices and Higher Rates Mean Bigger Affordability Hurdles for the U.S. Consumer
In the U.S., homeownership is often described as part of the “American dream,” a way for consumers to accumulate wealth and gain other economic benefits. Almost two out of three U.S. households own the home they live in, a relatively stable amount over the last decade. Buying a home is usually the largest investment that a consumer will make, and the purchase price usually far exceeds what most can afford out of their current savings. In 2022, roughly 70% of home purchases were made with the help of mortgage financing.
Inflation in Services Likely to Rise Further Despite Slowing Goods Prices
Given rising demand for in-person services, the slow pass-through of surging house prices to rent and owners’ equivalent rent (OER), and higher health care worker wages, services inflation is likely to increase further.
COVID-19 Mortgage Relief—The Role of Income Support
The COVID-19 pandemic has led to a large number of furloughs, layoffs, reductions in hours worked, and wage cuts. Anticipating that many homeowners would consequently have problems paying their monthly mortgage bill, the U.S. Department of Housing and Urban Development ordered all mortgage servicers of federally backed debt to provide forbearance to any homeowners affected by the crisis. In addition, bank regulators encouraged lenders to forbear and restructure mortgages for borrowers affected by the shutdown, actions that staved off an immediate wave of foreclosures. At the end of the ...
Does Homeownership Provide an Escape from High Rent Burdens?
Many first-time homebuyers—often with little savings and vulnerable to economic shocks—obtain their mortgages through the Federal Housing Authority (FHA) loan program. Often, these borrowers are moving from apartments and have presumably weighed the costs of renting versus owning.
The Long Road to Housing Finance Reform: 'Are We There Yet?'
Over the past decade, broad-based legislative reforms for housing finance have proven elusive. However, reflecting lessons from the financial crisis, a political consensus has emerged on how Fannie Mae and Freddie Mac should operate.
Highly Indebted FHA Borrowers at Special Risk as COVID-19 Forbearance Ends
The situation appears most urgent for those borrowers who entered the crisis with a high debt load and little room to financially navigate without forbearance.
Federal Reserve Banks of Atlanta and Dallas Conference Explored Housing, Urban Economics
Residential real estate prices rose sharply throughout the United States following the onset of COVID-19 in early 2020. While property owners received a capital gains windfall, first-time buyers and renters have struggled with reduced affordability.
Briefing
Removing Conflict of Interest for Agents of Homebuyers
In real estate transactions, sellers' agents have weak incentives to market homes sufficiently long to secure top prices for their clients. Buyers' agents, however, face completely backward incentives: They get paid more when their clients pay more for their homes. We discuss an a la carte compensation model for buyers' agents that eliminates this conflict of interest.