Dr. Jim Doti believes inflation will go up. He didn’t present a forecast of wild double-digit inflation for 2022, however he does believe the data points to higher inflation. He and his team have a good track record of being correct.
They suggest that if inflation is going to increase, we can expect house prices to go down because mortgage rates rise. Housing is an excellent long-term inflation hedge. Yet, in the short term rising inflation leads to a decrease in home prices, historically. House prices have been rising for a long time, and their model suggests that there will be a short term minor correction.
If you watch the video yourself, the national economic forecast and the stock investment advice will be of the most general interest. The second section of the forecast is about California specifically.
Watching the presentation reminded me of sitting in econometrics class as an undergraduate at Chapman University with Dr. Adibi, who was spearheading the Chapman Economic Forecast at the time. He explained that he used new housing starts and construction permits as a leading economic indicator. That seemed so genius to me. They are still doing it with great success. You can buy their Economics & Business Review.
Speaking of home building and prices. This was posted on the same day.