Opinion | A Home Is Your Castle Against Rising Inflation

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From WSJopinion: Houses, like most physical assets, retain their real value during high inflation and have done far better than most such assets, writes Kotlikoff

Journal Editorial Report: Paul Gigot interviews former Trump economics chief Kevin Hassett. Images: Getty Images Composite: Mark KellyMortgage interest rates have been rising at their fastest pace in years. Last April, the 30-year fixed mortgage rate was 3.2%. Today it’s 5%, the highest in more than a decade. “We’ve never seen a time where mortgage rates have risen as quickly as they have and the market hasn’t cooled off,” real-estate economist Ralph McLaughlinthe Journal.

But if you’re holding back from buying a house because of the rise in rates, consider that inflation is up even more. A year ago it was running at 2.6% on a year-over-year basis . Today, this retrospective annual inflation measure is 8.5%. We haven’t seen inflation this high since the early 1980s. If inflation continues at this rate, you’re better off borrowing money today at 5% and paying it back a year from now with dollars that have depreciated by 8.5%.

 

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opinion Kotlikoff I wonder if it has to do with the lack of supply we have on housing right now? But hey as long as that older generation is able to make money and I right? Those kids need to go back to their safe spaces

opinion Kotlikoff So, since home ownership among minorities is so low, you're saying that the racial wealth gap is increasing

opinion Kotlikoff Mortgage rates will be at 7% soon and the housing market will collapse. Unlike 2008 the fed cannot lower the rates.

opinion Kotlikoff Yeah, I remember that line from 2008 too

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