2 Comments
Nov 15, 2022Liked by Peter Nayland Kust

I'm not sure pushing on a string is the right analogy. It's like being at the helm of a good-size boat. They don't respond to control inputs instantly, so inexperienced people will almost inevitably over-control them.

Mortgage rates have more than doubled from ~3% to ~7%. This will inevitably cause a decline in housing prices, which has already started, but sellers are stubborn and it will take time before the full effect is apparent. When you have a substantial decline in real estate prices, people who feel well-off now due to all the paper gains/equity they have in their homes will be less inclined to spend money. The same is true the people's 401ks take a hit via a decline in the stock markets. None of this happens instantly, but it will happen, and then the demand side of things will shrink, which will reduce pressure at least some prices.

Expand full comment