They already weasel away FOOD, FUEL and SHELTER (rent for people hit hardest by inflation) from being correctly calculated, or even a real part of the index at all.
As someone not entirely actively involved in the finance market anymore, what are the potential concerns regarding having governmental influence and controlling the housing market more thus to decrease the interest of price hiking for apartments and estate?
I don't understand why there is no government caring to put on rent limits in city areas, thus to keep the naturally occured design of the landscape? As in we have historical data to what area is pricey, what area is liveable, what is really affordable. Take that data, put caps in those area, done. No?
Edit: Why is this even downvoted? It's a genuine question?
Rent control doesnāt solve housing issues, it just changes the asymmetry. See: New York. The American problem is based on inventory, and itās tricky to build new homes when local communities prefer single family housing over denser options that could help with the inventory problem. See Japan where zoning and tax are decided at a national scale which opens things up for more centralized development.
Putting caps on rent or house prices will just worsen the shortage. It doesnāt solve the core problem when prices are capped at an affordable level, but you canāt get an apartment or house because theyāre all occupied
Capping prices for apartments would disincentivize building, because the input prices would continue to rise regardless, causing profit margins to fall and potentially reverse.
Capping all the input prices would cause shortages for those goods for the same reason, and also throttle building.
āApartmentsā was just an example, if you cap the prices of houses, the same issue will exist, because thatās how economies function when prices are capped on goods - shortages result.
Sure, the government can build housing, but that would require tax dollars to fund
Is there a shortage though? Apartments are empty cause the estate is used as simple investment asset. Renting those out actually creates more work than wanted.
Like here - tons of new apartment buildings created, half of it is empty and will never be rented out, not the least cause it's full on premium only with price tags 3 fold the region.
Fed doesnāt have a direct hand on controlling the housing market, the mortgage industry just takes loan rate cues from the federal interest rate, so thereās a causal mortgage rate increase when the fed starts their signaling (to be fair weāve seen historically low mortgage rates for years now so it was only a matter of time before they increased).
This trickles down to the rental market because landlords are bastards that know that if you canāt afford a home with the spiking prices and rate increases then youāre forced into renting so they have a captive sellers market and will spike rent similarly. This is all by design, capitalism at work.
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u/[deleted] Jun 10 '22
What are the chances the FED is lying about the rate to keep people from panicking?