re: Powell: Fed can maintain higher rates for "as long as needed"

quote:

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But higher rates are how you in theory get housing back to a more affordable level. The rates lower demand which then lowers prices

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That only addresses the demand side and assumes stable/adequate supply.

We have a supply side problem as well that needs to be addressed. The catch is, higher rates means higher cost of capital for builders - meaning it's more financially difficult to increase supply. That increase in CoC goes where? In general terms, costs translate to price (companies might eat a little bit of margin, but they have to remain profitable).

The tension between the supply side and demand side is pretty clear. It's a trick bag without a clear way to get out of without something breaking.