Housing inflation, while often overlooked, is an important component of the overall inflation picture.

High inflation is on the minds of everyone as interest rates rise and everything from gas to rent costs more day-to-day. But there is one area of inflation we don’t hear complaints about, especially from a specific group of the population.  That area consists of housing prices. The specific group consists of homeowners. If you own a home today—you look at the home sales around you and marvel at how much more your home is worth.

Yet, though we like to blame the price of oil, housing inflation is a more important component of inflation than gas prices. That is because housing payments, including rent and mortgages, are a greater portion of our paycheck. Rising housing prices were masked as a component of inflation for a time because interest rates were falling to historic lows at the same time, but now interest rates are higher – though they are still historically low.

Higher housing prices and rising interest rates are causing decreasing home affordability and rising rents as well. Even property taxes are going up due to the higher house values. However, this issue does not affect everyone equally.  If your home is paid off or you locked in a low rate in the past few years, you have inflation protection.  And that includes the majority of homeowners. If you are renting and/or aspiring to purchase, you have none of this protection.  The next question is – how long can home prices keep rising at this pace?  The answer to this question will give us a clue as to the future of inflation. More on this question in the coming weeks.