So, it looks like home prices are continuing to weaken. You probably know this, but now we’ve got some data to show it. And I’ll show you that data in this edition of the wealth architect podcast. Stay tuned. Just a quick thing to talk about home prices today. We just got a report here, SATA CMBC. home price gains weakened sharply to end 2022 According to a S&P Case Shiller Index report. And that’s an interesting thing, because a lot of people are saying, well, the home market is going to be immune to going down. Now it hasn’t dropped, right, it’s still actually going up, it’s just not going up at the rate that it was. In fact, home prices in December were 5.8%, higher than they were in the prior to December of 2021. So, they’re still growing, which tells you something, it tells you that there’s still inflation, right? Even though homes are going up 5.8%, that tells you that they have been able to get rid of the inflation in the biggest asset category that there is. If something’s increasing at 5.8%, you know what your eggs are doing, right? You know what your gas and your car prices and your milk and your steak, and your vacations are all doing, they’re all going up and so are houses.  Sometimes they take the housing out, but eventually you can’t hide this stuff forever. So, there’s still inflation.  

But housing prices are not growing as quickly as they were. Will they reverse? I think they will. And here’s why inflation is seeing its way into mortgage rates. So as the Fed continues to raise rates, they’re probably going to continue to raise rates through 2023. I don’t know if believe them or not, I don’t know, if we can believe anything they say. At some point, they’re going to have to stop raising rates, because you’re going to kill the economy, I think they’re going to kill the pension system, or they’re going to kill the stock market. And they’re also killing themselves. Because as you raise rates, you have to issue debt. We’re still issuing more and more debt. We’re spending all kinds of money to send it to Ukraine, and to send it to people for all kinds of crazy things. And we’re not really reining in our spending. And if you don’t rein in your spending, you’re spending more. Well, when you spend more, you have to finance it. When you finance it at higher rates. Now, where are you going to get the money? You’re going to have to tax people in the United States more, but there’s not enough people now that make enough money to be able to tax them to offset the amount of interest that we’re going to have to be paying. So, we’re going to have to print more money, when you print more money, that means there was more of it, that means it’s inflationary. So, this is the beginning of a spiral, it’s actually probably not the beginning, it’s probably the middle of a spiral. And that’s the issues that we’re seeing. Now, if you talk about what happened in 2021, it was up about 19%, right housing prices, and now they’re only up 5%- 5.8%. Well, whoop dee doo, that still means that there’s inflation.

So, if you’re a homeowner out there, at least you have a place to live. But if you had locked in a low rate, it’s good for you, if you didn’t lock it in, you’re probably stuck with an adjustable rate. And that means a lot of people with adjustable rates are going to be hammered because their rates have gone up from 2% to 6%, or 7% or 8%. And they may have to move out and there’s going to be a housing bust in some cities when that happens. So, housing prices are going up. Inflation is still here, but housing prices aren’t going up much anymore, because of the increase in the rate of inflation and what the Fed is trying to do with it. So just a quick piece of news on housing. Hope you have a great day and I’ll see you on the next edition of the wealth architect podcast.