If you've read anything by those involved in the real estate industry, you've probably heard things like, "this isn't like the pre-2008 housing bubble", "underwriting standards are better", "the housing market is stronger", or "this is solely a supply and demand issue." But those distract from the reality in markets.
Yes, there may be issues with supply and demand, with lower housing supply and increased demand helping boost prices. Yes, there may be more all-cash buyers, including real estate investors, buying houses and boosting prices. And yes, there may be more people from California, New York, and other high-priced states trying to cash out and buy houses where it's more affordable, driving up costs elsewhere.
But all those excuses only explain THAT there are issues with supply and demand. They don't explain WHY there are issues with supply and demand. And by doing so, they ignore the elephant in the room. The Federal Reserve's Effect on the Economy.
There's no denying that ever since the 2008 financial crisis, the Federal Reserve has been the dominant force in the economy. Having created over $8 trillion out of thin air since 2008, the past 14 years have seen money creation on a scale that previous generations have never experienced.
We're seeing many of the effects of this radical monetary policy right now, in the form of both asset bubbles and higher prices. As inflation spirals out of control, the Fed is pledging to do something, but will it be too little, too late?