FAST FIVE: Goldman Warns Of "Substantial" Surge In Home Prices, Expects Bigger Housing Bubble Than 2007
Goldman Warns Of “Substantial” Surge In Home Prices, Expects Bigger Housing Bubble Than 2007 One week ago, we said that in what is increasingly a stagflationary burst (or, as BofA put it “transitory hyperinflation”) right out of the 1970s playbook (and that was even before the latest blistering hot CPI and PPI numbers printed a few days ago).
At that point anyone countering that (hyper)inflation is transitory will be laughed right out of the room.
Here is some more detail from the Goldman note, first starting with why shelter inflation is arguably the most important component of the core CPI basket, and why it is also the one which politicians do everything in their power to manipulate.
To do this, it combines metro area-level CPI data with local-level data on unemployment rates, vacancy rates, and home price appreciation.
Across a number of specifications, 5%-15% of the rate of home price appreciation gets passed through to shelter inflation over a multi-year horizon.