The lockdowns and the requirement to work from home arguably did spur a revaluation of said home, and those who could arguably sought to purchase homes of a size and in a location more matching a lifestyle not oriented around going to an office 9-5 Monday-Friday.
At least some of the price increase from early 2020 on is thus an expression…
The lockdowns and the requirement to work from home arguably did spur a revaluation of said home, and those who could arguably sought to purchase homes of a size and in a location more matching a lifestyle not oriented around going to an office 9-5 Monday-Friday.
At least some of the price increase from early 2020 on is thus an expression of an increased perception in the value of one's home. As such, this is not price inflation as monetarists would define the term, but a genuine rebalancing of the value of a home relative to other fixed and durable items one might purchase, and indeed towards one's overall pattern of consumption.
However, from late 2021 onward, businesses were starting to push back, and attempting to move the cultural needle back towards its prior position. How much success they have had or will have is as yet an open question, but it is fair to say that their influence is not nil, and so the continued rise in the index past last 2021 becomes more indicative of a speculative bubble than a genuine revaluation of the home within one's overall spending habits.
There is no magic formula to ascertain how much price rise is speculation and how much is substantive shift in perceived value. We can broadly say that there are elements of both in the price rise, and that only the degree to which the price rises are speculative will we see a deflating of the bubble.
Which means that, yes, the reduction is a correction--that is what a bubble bursting ultimately is, after all. How much correction there will be and how long it will take are questions we cannot answer from the data we have to date.
The lockdowns and the requirement to work from home arguably did spur a revaluation of said home, and those who could arguably sought to purchase homes of a size and in a location more matching a lifestyle not oriented around going to an office 9-5 Monday-Friday.
At least some of the price increase from early 2020 on is thus an expression of an increased perception in the value of one's home. As such, this is not price inflation as monetarists would define the term, but a genuine rebalancing of the value of a home relative to other fixed and durable items one might purchase, and indeed towards one's overall pattern of consumption.
However, from late 2021 onward, businesses were starting to push back, and attempting to move the cultural needle back towards its prior position. How much success they have had or will have is as yet an open question, but it is fair to say that their influence is not nil, and so the continued rise in the index past last 2021 becomes more indicative of a speculative bubble than a genuine revaluation of the home within one's overall spending habits.
There is no magic formula to ascertain how much price rise is speculation and how much is substantive shift in perceived value. We can broadly say that there are elements of both in the price rise, and that only the degree to which the price rises are speculative will we see a deflating of the bubble.
Which means that, yes, the reduction is a correction--that is what a bubble bursting ultimately is, after all. How much correction there will be and how long it will take are questions we cannot answer from the data we have to date.