Reply to Does anybody have a grip on the housing market?

Forum Index » Real Estate

Reply to "Does anybody have a grip on the housing market?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous]The short version of the story is that our workhorse macroeconomic models aren't well designed for the kind of economic shock that the pandemic represented, and so they haven't performed very well. We've had supply-side shocks before (like the 1970s oil crisis), but the specifics of how the shock operates (in this case, by reducing service employment dramatically and by disrupting product supply chains) turn out to matter a lot, and these specific types of shocks only really happen in a large-scale pandemic, which hasn't really happened since modern economics (or modern data collection) began.

This is why, for example, so many forecasters thought that inflation was so unlikely to be a problem right up to the point where it became a problem. It's also why inflation has been slowing for months even though unemployment is as low as it has ever been. There is lots of ongoing work that is trying to rectify some of these facts on the ground with the modeling frameworks that are used for forecasting, but it takes time for our models and our intuition to develop. Lots of prior research suggests that large scale unemployment is needed for inflation to get back to its long term average; the fact that it isn't happening that way means that we know that many things still need to be tweaked, we just aren't sure yet exactly how.

If I had to guess, nominal prices will be slightly down nationally, and flat to slightly up in metros like the DMV that have a history of rapid population growth but had relatively slow pandemic home price growth. Keep in mind that real prices have already fallen quite a bit, and that real prices are what most of our economic intuition actually concerns itself with. But, realize that you're hearing a lot of uncertainty because there actually is a lot of uncertainty by historical standards, even at the highest levels. (Also, realize that nobody ever made a living out of saying "I don't know")[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics