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:
The 9am Bond Report - September 20, 2021
9/20/2021 1:54 PM
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US to accept vaccinated foreign travelers in early November
9/20/2021 10:57 AM
(Please visit the site to view this media)White House Covid-19 response coordinator has laid out a set of guidelines for foreign travelers to gain entry to the United States. CNBC's Kayla Tausche breaks it down....(Read More
Builder sentiment rose 1 point to 76, first gain in 3 months
9/20/2021 10:57 AM
(Please visit the site to view this media)Diana Olick breaks down the builder sentiment data that released Monday. The price of lumber is down and delivery times are expected to stay high due to the labor shortage impacting multiple sectors....(Read More
Heat rises on Fed trading rules as calls for investigation grow
9/20/2021 7:35 AM
(Please visit the site to view this media)CNBC's Steve Liesman reports on the Federal Reserve controversy of its trading rules....(read more)
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Why mortgage rates are rising
9/17/2021 2:25 PM
(Please visit the site to view this media)Matthew Pointon, senior property economist at Capital Economics, joins The Exchange with his analysis of the housing market and why mortgage rates keep rising....(Read More
The 2pm Bond Report - September 17, 2021
9/17/2021 2:25 PM
(Please visit the site to view this media)The 2pm Bond Report...(read more)
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Diana Olick breaks down artificial intelligence"s presence in real estate
9/17/2021 11:54 AM
(Please visit the site to view this media)CNBC's Diana Olick examines artificial intelligence's impact in the real estate market and how it's affecting housing prices nationwide....(Read More
Consumer sentiment index comes in slightly lower than forecasts
9/17/2021 11:05 AM
(Please visit the site to view this media)Rick Santelli joins 'Squawk on the Street' to break down what Friday's latest economic data means for the bond and stock markets....(rea...Read More
The 9am Bond Report - September 17, 2021
9/17/2021 9:33 AM
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Artificial intelligence takes over the real estate industry
9/17/2021 7:12 AM
(Please visit the site to view this media)CNBC's Diana Olick reports on the impact A.I. is having on the real estate industry....(read more)
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