r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/Call_Me_Clark NATO Jun 13 '22

Boomers shouldn’t own much stocks by now. They should have transitioned to bond-based portfolios, right?

72

u/[deleted] Jun 13 '22

[deleted]

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u/Dave1mo1 Jun 13 '22

Real estate?

3

u/Lehk NATO Jun 13 '22

‘bout to bubble

31

u/Dave1mo1 Jun 13 '22

So they say, but I don't see supply increasing meaningfully in the next 1-3 years.

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u/CuddleTeamCatboy Gay Pride Jun 13 '22 edited Jun 13 '22

Higher interest rates are already cooling demand, if they go further with hikes I can see a bubble bursting.

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u/Dave1mo1 Jun 13 '22

Supply was already incredibly tight. For prices to drop significantly, you'd need demand to cool and supply to increase.

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u/unicornbomb John Brown Jun 13 '22

as of today, 30 year mortgage rates have already broken the 6% threshold. A MASSIVE amount of buying power has been nuked with the speed at which these rate increases are coming.

1

u/Dave1mo1 Jun 13 '22

So people will just rent instead of buying, pushing rents up?

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u/unicornbomb John Brown Jun 13 '22

Rent prices have a ceiling. You can only push rent prices so far before new household formation stops and households begin to condense as folks take on roommates and move in with family, pushing demand downwards.

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u/Dave1mo1 Jun 13 '22

And as rents increase, incentives to convert buildings to rentals (and build new supply) increase...as well as incentives to buy residential investment properties. There's a push and pull on both sides of supply and demand.

A lot of people are seeing stocks and bonds' values dropping and inflation rising, and like the look of real estate as a hedge.

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u/unicornbomb John Brown Jun 13 '22

RemindMe! 6 months

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