Costly housing will make the job of taming inflation even harder – Orange County Register

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By Felice Maranz | Bloomberg

There are plenty of reasons US housing will remain costly, which in turn will contribute to inflation, complicating the Fed’s policy path.

The basic supply-and-demand dynamic — with the former squeezed and the latter still strong — means consumers will need to pay up for a place to live. A tight labor market and rising wages also support home prices. Solid financing, stricter regulation, and “massively deleveraged” consumers with equity-rich properties make the case for strategist Jared Dillian, who’s outlined why there won’t be another crisis in residential real estate.

Google home searches usually moderate during the summer, with potential buyers on vacation, according to UBS’s John Lovallo. But not this year.

Search interest for existing homes rose 1.6% and jumped 22% for new homes from the end of May through August versus the average of the same time period over the prior eight years, Lovallo writes. That’s in keeping with homebuilder commentary, like luxury builder Toll Brothers saying demand rose in August.

Rent has also exploded, hitting a fresh record last month.

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