How Will Government Increasing Interest Rates Affect Equitability

[Robert Reynolds]

I think that the government raising rates to curb inflation is dangerous. This current government is pushing equality and diversity, but I fear that higher rates aren’t going to push prices down, but only make it so the wealthy can purchase real estate and make the divide greater between the rich and the poor. For example in Los Angeles, prices are not going to drop in the near future, because our demand greatly outweighs our supply. There a zero new homes being built, because there is no land to develop. All the new construction appears to be luxury high rise condos. The other new construction appears to be low income fourplexes, that are being torn down for million dollar townhomes. Affordability is decreasing at an alarming rate.

Therefore, low to middle income renters will keep on renting and high income renters will be the only ones that can purchase a new house or condo and get out of the rat race. 

I have seen this personally with friends who make $150k a year and rent, thinking that the market is going to crash. They can’t save fast enough to buy in this expensive city that keeps increasing in value. They will have to continue to rent, or buy an hour away from work to be able to afford a house. I think that this topic needs to be discussed further and looked into in more depth.