Duke University economists weigh in on interest rates, inflation, and the NC housing market
As the Federal Reserve raises interest rates, Duke University economists expect the housing market to slow its frantic pace. But Duke University economists fear the pace of the reversal could put the country into a recession.
Anyone looking to buy a home lately knows the frenetic pace of the housing market, with bidding wars driving up home prices in every major city in North Carolina, and across the country.
But David Berger, an assistant professor of Economics at Duke University, says home prices are unlikely to fall in popular areas like the Triangle.
"Last year housing prices in Durham and Raleigh went up 30%," he said. "That's not going to happen again, I would be shocked. I think much closer would be below 10% or 5%, something like that."
Areas of the country with less tight housing markets may see prices fall, but North Carolina’s cities still have very high demand and very limited supply, Berger said.
"Interest rates have gone up substantially. I suspect the housing market will cool somewhat, relative to what it’s been like in the last two or three years," he said, but in the Triangle, "it’s going to be more of a modest cooling. It’s important to remember we have sort of record low housing inventories, still in the Triangle.”
Duke Economics professor Connell Fullenkamp said the federal reserve will probably have to keep raising interest rates to drive down inflation — and since it waited so long, it may cause a recession.
“Those things tend to decrease the probability that we can have the soft landing," he said. "So personally, I'm thinking that our economy is going to tip into a recession probably early next year.”
But, he said the recession is likely to be a mild one, given how strong consumption has been in the U.S.