EDITOR NOTE: There was a time not long ago when the Fed was worried about deflation. Housing prices may have pulled back starting in late 2007 and again in 2017. But overall, the trend has been steadily moving upward. So, no--housing prices weren’t one of them. Right now, with high demand, a lot of cash in the economy, low mortgage rates, and low supply, the housing market is red hot. So, why is the Fed still buying mortgage-backed securities (MBS)? The author below poses this simple question. He doesn’t provide an answer, but the charts that he presents illustrate a frightening scenario--namely, that something is about to give, and it doesn’t look favorable.
As I observed earlier today, US home prices are skyrocketing due, in part, to the massively loose monetary policy. But if the housing market is on fire, why is The Federal Reserve continuing to support the mortgage market through Agency MBS purchases?
Home price growth is at the housing bubble peak of 2005-2007. But since 2008, monetary policy has been loose as a goose and drunk as a skunk.
Putting together in one (scary) chart …
Might as well go down to the nightclub since The Fed seems to be tone deaf on the inflation it is causing.
Original post from ConfoundedInterest