Being a Homeowner is the Best Hedge Against Inflation

One of my favorite housing analysts to read is Logan Mohtashami with Housing Wire and here are his current thoughts on housing.
· He doesn’t believe the housing inventory crisis will end this year.
· He wants to see existing home inventory levels nationally at least 1.52 million which is still a historically low number. Nationally we ended February with just 870k homes for sale. Basically inventory levels need to double.
· Logan said the only way to solve our inventory crisis is higher mortgage rates to cool demand for housing. He’s probably right.
· The war in Ukraine is a high economic risk for world growth the longer it goes on. And the rise in commodity prices is the last thing we needed right now in light of soaring inflation.
· Logan believes that inflation will probably get worse as rental costs are soaring and wages will continue to rise.
· He said that being a homeowner is the best hedge against inflation as nearly every homeowner has a fixed rate mortgage. For example, a client refinanced summer of 2020 at 2.75% with a P&I Payment of $2000 a month. Prices have gone up about 10% since then; but their P&I Payment is still $2000 a month; thus their mortgage payment feels like it’s only $1800 a month in today’s dollars.
· Because of this Logan is concerned that homeowners won’t move because they have such a great deal currently on a mortgage with a fixed rate in the 2’s. The Lock-In Effect that I have been talking about for the last 4 years.