Analysis on the US Housing Market During the Fed’s 2022-2023 Rate Hike Cycle

DOI

10.2991/aebmr.k.220405.212How to use a DOI?

Keywords

House price; interest rates; Federal Reserve; rate hikes; monetary policy

Abstract

As a result of the stimulating monetary and fiscal policies during the Covid-19 pandemic, the interest rate in the US has reached close to zero and the inflation rate has reached an unprecedentedly high level–seven percent in the year 2021–due to problems of the supply chain. The Fed has announced its plan to increase rates multiple times in the year 2022. This paper aims to analyze and estimate the effects of raised rates on the housing market in the US during the upcoming rate hike cycle. The result shows that the house prices will cool down but are not likely to decrease because firstly, based on historical data mortgage rates do not usually go the same direction with the Fed’s rate changes; in addition, there is substantial inertia in house prices and changes in interest rates affect house prices gradually rather than on impact. Finally, unlike previous rate hikes raising interest rates would not solve the supply chain problem which is the primary cause of inflation during the pandemic; therefore, if inflation stays high, house prices will stay high. A thorough analysis on house prices during rate hikes will enable investors to make better decisions on investments, and take acute actions accordingly; for potential buyers who hesitated on the high price in 2021 or are looking for a permanent residency, this paper will provide guidance on mortgage rates fluctuation and projection on house prices.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article distributed under the CC BY-NC 4.0 license.

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TY  - CONF
AU  - Yuxiao Chen
PY  - 2022
DA  - 2022/04/29
TI  - Analysis on the US Housing Market During the Fed’s 2022-2023 Rate Hike Cycle
BT  - Proceedings of the 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022)
PB  - Atlantis Press
SP  - 1281
EP  - 1285
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220405.212
DO  - 10.2991/aebmr.k.220405.212
ID  - Chen2022
ER  -