To see current market stories scroll down for up to the minute stories and news regarding the stock markets and the interest rate markets.  The following charts show the current Real Estate Trends for the Greater Sacramento Area.

Statistics are for the Greater Sacramento area including Sacramento, Yolo, Placer and Eldorado Counties

How Higher Priced Homes and Technology Killed Inflation:
It has long been the Federal Reserve's Policy to fight inflation by raising interest rates to slow consumers from spending too fast and causing inflation.  So you might ask why with housing prices rising to an almost unaffordable high that the Fed (the Federal Reserve) has not raised interest rates to combat such high housing prices.  Well, the answer might surprise you or it might just be so obvious that you slap your economic head and say wow that's right.  Inflation is a rise in prices of consumer goods and services over time given in a percentage of gain from month to month or year to year.  The rise in housing prices can and is quantified the same way, however, the big difference between goods and services and Housing prices is that consumers need the basics every month like food, consumer goods, and services from plumbers, electricians, etc., but consumers don't buy houses every month.  On average people stay in their housing for an average 5-7 years thus not being affected by housing prices until it is time to move.  In addition, when housing prices go up and people stay in their homes for an average of 5-7 years they end up realizing price gains on their existing home and this is called realized equity.  So when the prices of goods and services increase month to month consumers need the basic items to live so they will buy them realizing no equity as these items are consumed. 
     Household income plays a factor in inflation as well as the more money people make the more they tend to consume.  So if America on the average is making more money they will consume more creating a higher demand for goods and services thus prices will rise to offset the higher demand.  So why doesn't such high priced housing effect interest rates?  Simply put housing is not something consumed it is an asset that has trade value or equity.  In addition, people are not in need of purchasing housing every month or every year for that matter. 
     It has long been the Federal Reserve's policy to keep inflation around 2% and since the 1970's the Fed has done a great job of keeping in check.  However, I believe there are other factors in play the Fed is not taking into consideration.  I will say that the high priced housing has used up far more of the average household budget thus leaving consumers less money to buy goods and services with.  This may either be by design, but I would contend that it is actually a happy accident in the Fed's favor. If you are spending the majority of your income on your housing expenses that leaves you with less money to buy goods and services.  In addition to that technology is such a big part of today's world that people don't need or want for more personal items to keep them entertained or fulfilled thus lower demand for certain physical items.  It is tough to have inflation if the demand for things goes away and that is what technology has done.  An example are college kids these days. College kids need to eat, drink and study, but with their smartphones, they can get everything they need on that device delivered to their door and their entertainment is at their fingertips.   Technology has slowed the need or the demand for goods and services and by doing so has slowed inflation.  I hope this has enlightened you on how the markets work and how they change.  I will predict that we see some changes in the Federal Reserve's approach to fighting inflation by raising interest rates in the future with the onset of even newer technology advances.     

Current News Feeds:

Current Market News:
Mortgage servicers seek government aid as forebearance requests soar
4/8/2020 3:23 PM
(Please visit the site to view this media)CNBC's Diana Olick reports on the drama in the mortgage industry....(read more)
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Fed expects funds rate to be 0-0.25% until virus passes, will use all tools
4/8/2020 1:49 PM
(Please visit the site to view this media)CNBC's Steve Liesman reports on the latest Fed minutes. This comes after the Federal Reserve's drastic measures to bolster the economy amid the coronavirus pandemic....(Read More
Fed to temporarily lift asset cap on Wells Fargo
4/8/2020 12:37 PM
(Please visit the site to view this media)CNBC's Steve Liesman reports on the Fed's decision to temporarily lift lending restrictions on Wells Fargo....(read more)
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Mnuchin: The government won"t run out of money for small business
4/8/2020 8:56 AM
(Please visit the site to view this media)Treasury Secretary Steven Mnuchin joins CNBC's "Squawk on the Street" to discuss the Trump administration's efforts to combat the economic impact of the novel coronavirus....(Read More
Weekly mortgage applications drop 17.9% as coronavirus scares off buyers
4/8/2020 7:04 AM
(Please visit the site to view this media)CNBC's Diana Olick reports on the latest mortgage applications data....(read more)
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Bond market reflecting fundamentals: Jeff Rosenberg
4/7/2020 3:52 PM
(Please visit the site to view this media)Jeffrey Rosenberg, BlackRock senior portfolio manager, joins "Closing Bell" to discuss the state of the markets and bonds....(read moreRead More
Mortgage forbearance requests surged 1896% during the second half of March
4/7/2020 2:52 PM
(Please visit the site to view this media)CNBC's Diana Olick reports how the rise of mortgage forebearance requests for the month of March and early April....(read more)
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Mnuchin: Seeking $250 billion more for payment protection program
4/7/2020 1:56 PM
(Please visit the site to view this media)CNBC's Kayla Tausche reports on Treasury Secretary Steve Mnuchin's tweet indicating that Congress is working to secure an additional $250 billion for the small business that need the money....(Read More
Santelli Exchange: A leveraged buyout of the United States of America
4/7/2020 1:55 PM
(Please visit the site to view this media)Grant's Interest Rate Observer Founder and Editor James Grant and CNBC's Rick Santelli discuss the limitless well of liquidity from the Fed and price discovery....(Read More
Fed makes Main Street lending facility a top priority
4/7/2020 9:00 AM
(Please visit the site to view this media)CNBC's Steve Liesman reports the latest on the Federal Reserve's efforts to provide relief to the economy as the coronavirus-driven downturn continues....(Read More