The Inflation Spike Everyone Will Misread

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This week, you’re going to start hearing a familiar narrative again…

“Inflation is back.”

And on the surface, it’s going to look true.

The next CPI print is very likely to come in hotter than expected. We’re already seeing it in real-time data like Truflation. Energy prices have surged, and because energy feeds directly into headline CPI, it’s going to push that number up—fast.

But here’s the problem…

That’s not the whole story.

Energy is notoriously volatile, which is why the Fed focuses more on core inflation—stripping out food and energy. But even core isn’t immune here. Petroleum touches nearly everything in the economy—transportation, manufacturing, packaging—so some of that pressure will bleed through.

So yes, in the short term, inflation is going to look worse.

But step back for a second.

This spike is being driven largely by geopolitical tension—specifically the situation with Iran. And unlike past conflicts, this is not shaping up to be a multi-year war like Iraq or Afghanistan. In fact, the current administration is already signaling that this could be resolved relatively quickly.

Whether it’s weeks or a few months, the key point is this:

This is a temporary shock, not a structural shift.

And when that shock fades, energy prices will likely come back down… bringing headline inflation with it.

Meanwhile, underneath the surface, something very different is happening.

Core inflation—particularly housing—is already decelerating.

Housing makes up roughly 30% of CPI, and here’s the kicker:

The way it’s measured is lagged by about six months.

In other words, the official data you’re seeing today is reflecting what rents were doing half a year ago.

But in the real world, rents have already been cooling.

That’s why the most important question right now isn’t:

“What does CPI say?”

It’s:

“What’s actually happening in real time?”

That’s exactly what we explore in this week’s episode of Wealth Formula Podcast.

Our guest, Edward Coulson, is one of the leading experts in housing data. He uses alternative models that track real-time rental trends—and more importantly, he’s been consistently ahead of the curve in predicting the direction of core inflation.

Even before this recent energy spike, his data has been showing a clear trend:

Inflation has been overstated—and it’s been slowing for months.

So while the headlines may soon scream “inflation is back,” the reality may be the opposite.

This is one of those moments where understanding the components of inflation—and the timing behind them—matters more than ever.

Listen to this week’s Wealth Formula Podcast to get the full picture.

Because if you’re making decisions based only on headline numbers, you’re likely to get this one completely wrong.

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Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at [email protected].

Welcome everybody. This is Buck Joffrey with the Wealth Formula Podcast. Coming to you from Montecito, California. And today, uh, before I begin, I want to as always remind you that there are other resources associated with this podcast, specifically the website, wealthformula.com. Lots of opportunities to get more involved with the community there, including the chance to join our free accredited investor group.

Investor club, and all you do is you go to wealthformula.com and sign up for that. Get onboarded. Just a few questions to respond to, and then you talk to me one-on-one and, uh, you’re then part of the group and you get an option to, uh, potentially participate in a number of uh, deals. So really easy to do.

Go to wealthformula.com. Sign up today. Uh, I’ll talk to you there soon. Now, as for today, uh, let’s, uh, talk a little bit about something kind of going on in the news, right? Because we’ve got the whole Iranian kerfuffle, and with that unfortunate event, you’re going to hear something of a familiar narrative.

Again, that is, that inflation is back. And on the surface, it’s gonna be true, it’s gonna look true. The next CPI print is very likely to come in hotter than expected. Uh, we’re already seeing it in real time data like reflation energy, prices of surge. And because energy feeds directly into headline CPI, it’s going to push that number up.

Fast and we can all feel it. I mean, you could feel it at the gas pumps, right? But here’s the problem. It’s not the whole story. The thing is that energy is notoriously volatile, which is why the Federal Reserve focuses more on something called core inflation. Which strips out food and energy, but even core isn’t immune here from the war and the price of oil petroleum touches nearly everything in the economy, transportation, manufacturing, packaging.

So some of that pressure will bleed through for sure. So yes, in the short term, inflation is going to look worse. I would urge you to step back for a second because the spike is being driven largely by a geopolitical issue, specifically the situation with Iran, and unlike past conflicts, this is not shaping up to be a multi-year war like Iraq or Afghanistan.

In fact, Trump is already signaling as could be resolved. Relatively quickly, and maybe it’s not as quickly as he says it is. Maybe it’s not a few days or weeks, but maybe it’s a few months. But there is a key point here in that this is a temporary shock, not a structural shift. And when that shock fades, energy prices are gonna come back down and that’s gonna bring down inflation with it.

Meanwhile, underneath the surface, something very different is happening. Core inflation, particularly housing. Has been decelerating for a long time, and housing makes up roughly 30% of CPI and the way it’s measured lag by about six months. In other words, the official data you see today typically reflects what rents we’re doing, um, you know, six months or more ago.

But in the real world, rents have been cooling in real time. And that is, uh, something we see on the rental market too, right? We’re waiting for this. Um, thing to turn around a little bit and it will, well, the most important question, therefore isn’t necessarily what CPI is gonna say. It’s actually what’s happening in real time, and that’s what we’re gonna explore in this week’s episode of Wealth Formula Podcast.

So my guest, Edward Colson, he’s one of the leading experts in housing data, and he uses alternative models that, uh, track real-time rental trends. And more importantly, he’s been consistently out of the curve in predicting the direction of core inflation. Now interestingly, even before this recent energy spike, his data has been showing a very clear trend that inflation has been overstated and that it’s been slowing for months.

So while the headlines may scream soon, that inflation’s back and that it’s gonna be a big problem, this is one of those moments where I think understanding the components of inflation and the timing behind them matters more than ever. Anyway, we will have that conversation for you right after these messages.

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Today, um, we are going to talk about housing, but not in the way most, uh, most of the time that we do. Uh, because the numbers we rely on, home prices, rent, inflation, they’re not as straightforward as they seem, and in fact, some of the most important data driving markets and interest rates may be. And it distorted.

And if that’s, uh, true, it has massive implications for investors. My guest today is, uh, professor, uh, Edward Colson from uc, Irvine. He spent decades studying housing markets, mortgage finance, and how these numbers actually con are constructed. And so today we’re gonna break down, uh, a little bit about what’s right and what’s wrong with that, uh, way of doing things.

So, uh, welcome to the show.

Oh, thank you for having me. Pleasure to be here.

Well, let’s start with this. So most investors think, you know, housing prices and rent data are pretty straightforward, just numbers. So at a high level, how much of the data is actually real versus constructed?

Well, I, you we’re talking about rent data, um, what you said is correct that, um, the CPI, which is used for.

Uh, a wide variety of things including, uh, guiding monetary policy. Um, the biggest component of that is, is, is rent. And that rent data goes into the CPI in multiple forms, both as a representation of renter costs, which are of course part of the CPI and as, as a way of computing housing costs for people who owner or occupy.

That’s a very difficult. Topic, uh, because we don’t actually see rent for owner occupied housing. So that’s a, that’s a particularly problematic part of the CPI. Um, and the Bureau of Labor Statistics, which is the one that compiles the, the, all the price data that goes into the construction of the CPI, they, they have a particular way of doing this, which, which may be familiar to people, uh, which is if the, if you’re so, so what is the CPI first?

Let’s talk about that. It’s a basket of goods. That, you know, people purchase on a monthly basis and that basket is more or less held. Constant basket changes every once in a while, but mostly it’s held constant. And people from the Bureau of Labor Statistics go out and sample prices from across the country and online.

And, um. Uh, calculate the pad, the, the, the price, the total price of that market basket. So that’s all familiar. So if you, so, so bananas are an input to the consumer price index. And so they check the price of bananas each month by going to the store and actually looking at the price. But rent is not done like that.

Uh, rent is done in an entirely different way. Uh, the, the bureau has. A set of six, uh, samples of households, panels, if you will. And each month they go to one of these panels and they ask, what’s your rent? This, this month? And in the next month they’ll go to the second panel, and in the third month they’ll go to the third panel and they’ll do that for six months.

Who’s, who’s on the panels? What’s, what’s

the panels? Oh, just, it’s a sample of households. I actually don’t know how that panel is put together, but it’s ordinary folks. Um. You know, you might, you, you might be a part of that panel someday. I don’t, I don’t know. It’s not, it’s not that big. I don’t know, but it’s, they think it’s representative and I actually have no reason for thinking.

It’s not representative in terms of the people that they, that they survey for this, the problem is this, that when you, uh, ask somebody what is your rent? Well, you know, you asked that question six months ago and the answer’s probably the same. Yeah. Because you’re still on the same rent lease that you signed up to 12 months ago, and so there’s, and so it’s not capturing the current state of the housing market, right?

Mm-hmm. Um, so. So that’s been the bulk of our research on this topic is to, is to note first of all that this, this way of measuring. So they’re taking the people that they interview this month and they’re comparing ’em to the rents they had six months ago. And that’s the rental component of the CPI, how much those rents got bumped up.

For most of those people, the answer is zero because they’re still on the same lease that they were six months ago. And then they do the same for the six successive panels that form their, their rental survey. I say the problem with that is that that is not going to reflect the state of the current housing market.

That’s gonna reflect, right? So it’s lagging

probably at least six months

at that point. It’s, it’s sluggish. Uh, so it doesn’t change as rapidly as the actual housing market does. It’s lagged because it’s reflecting the state of the housing market, as you say, on average it, it, it should be six months, it turns out.

Probably a little bit more than that, um, uh, six months ago. And this is fine for most uses of the CPI. That’s fine. Because what is the CPI meant to do? It’s meant to reflect the cost of living. And for people whose rent hasn’t gone up, you know, the cost of living hasn’t gone up. That’s fine. That’s that’s perfect.

That’s what the CPI was originally meant to do,

but it doesn’t really give you a trajectory.

It doesn’t really give you a trajectory of the housing market. And if you’re gonna use the CPI for setting monetary policy, setting interest rates, um, then it’s going to not reflect the current state of the housing market like it should.

It’s not gonna reflect the current kind of macro economy. So just, just the problem,

just for a moment for if we could go back and think about what actually happened in the last, you know, five years or so. Mm-hmm. Every year we had pretty massive increases in rents nationally.

Mm-hmm.

And then over the last, uh, tell unless a couple years rents have been pretty flat.

Mm-hmm.

It’s interesting because I’ve had someone tell me about this before, an economist who came on before and he was convinced. That CPI was going to, you know, was gonna collapse because of, of the way that there was that time gap. But it, it didn’t really happen. I mean, it, it, it kind of went down. I mean, it definitely went down CPI went down.

But how, how do we look at those numbers right now? Like, y

you’re right. Yeah. Um, we have an alternative, uh, rental index. You know, indicator, which we feel is more contemporaneous measured than the CPI is. And so we track that and we track, uh, the actual CPI and we compare them. And as a general rule, you, you would expect that after six months, the actual CPI, the rental CPI would catch up to our CPI and it does.

You can look at the graphics on our website and you can see that there’s, that there’s this six to eight month lag between the actual and our, uh, rental inflation indexes. But it doesn’t collapse in the way that you might think because you’re right currently, um, our measure of rents, and you have to believe us, you can look at Zillow and you can look at, um, other.

Data sources would show that rental inflation right now is basically zero. And yet the CPII didn’t look at the latest one, the one that came out a couple days ago. But up till now, the rental inflation, uh, that, that the BLS is measuring is about 3%. It’s about the same as the actual overall CPI and we’re.

But we feel like that’s an overstatement of the inflation, that that leads to an overstatement of the inflation rate. That, um, because the actual rental inflation by our measure buys those, measure by other data sources, measures is, as I say, basically flat. It’s zero.

So one thing to to emphasize there too, um, as, as CPI is calculated.

Rent plays a pretty significant component of that CPI. What percentage of CPI approximately is that?

Yeah, you, um, it depends on which measure you’re using. There’s, there’s both the. The, uh, consumer price index, and there’s also the, uh, personal consumption deflator, which is an alternative measure. And then it depends also on whether you’re talking about core inflation or overall inflation.

Core inflation, as you may know, takes out food and energy because they’re too seasonal and too volatile, and they depend on things that you know, aren’t. You know, tied to the macro economy as much, right?

Well, well, yeah. So let’s more, because like, I understand and if, correct me if I’m wrong, but that’s the big one that the, the Fed’s looking at when it’s deciding on monetary policy.

And so the answer to your, uh, question is that it can be up to the high thirties percentage. Yeah, up to 40 depending on, so it’s between 30 and 40%, basically. So it’s the biggest single item. If you put the both of the rent and the owner, uh, equivalent rent into the calculation, it’s between 30 and 40%.

So that could, that could drop, that could drop the core by a full percent percentage point.

Yeah. Yeah, that’s right.

So if, yeah, it’s not, you know, three point something, it’s two point something, which obviously

Yeah.

That level.

Yeah. So we, so we’ve generally found that, you know, the. The, the, the federal government CPI is not as volatile as true rental CPI when, when the economy’s going great and rents are going up, the Fed doesn’t see that as much.

And

we originally got to this point by looking at, at actual rents during the great financial crisis, which were going down during the great financial crisis because there was a recession on, but the Fed never, the Fed obvious. I say the Fed, the BBL S index never saw that they never had rents going down.

At least not by very much during the, during the GFC, during the Great recession. That’s when we first noticed that this was kind of an issue. But ever since then, we’ve seen that when rents go down, they don’t, they don’t see it as much. And when rents go up, they don’t see it as much as it is. So, so basically it’s not as, not as sensitive to current conditions as contemporaneous rents.

Measurements would be.

So if you’re an investor and you’re relying on housing data to make decisions, I mean, what, what are your other options to look at?

Well, you can go to our website. Okay. It’s, uh, a, you just type in a CY inflation. A CY are the three researchers on the C in that, um, uh, the, uh, a CY inflation index or something like that.

You’ll, you’ll come up, it’s housed at Penn State, which is, uh, the university used to be at, and my two colleagues are still there.

How do you, how do you guys get that number?

Well, we, oh, well, how do we get our inflation number? Yeah, our rent

number,

we do something, well, we do something like this. There’s a bit of technical stuff to this, but basically we take, um, real Capital Analytics has data on, um, have an index for, uh.

Multi-family buildings. That’s a price index for that tracks sales of multi-family buildings so we can see the value of buildings and we also have a capric. If you, basically, if you multiply a cap rate by, or divide cap rate by, I forget which one, by building price. You get a rental series, you have to adjust that for a bunch of stuff.

But that’s very contemporaneously measured. And um, we get that rental series out of that, and then we take that rental series properly on massaged. And we go to the, the inflation data that the, that the bureau labor statistics puts out. We pull out their rent, we plug in our rent, and we get an alternative inflation measure.

And what is that right now?

Oh, well, lemme take a look. So for Core CPI, it’s a little less than 2%.

Yeah.

Which, which doesn’t mean, you know, it doesn’t, I mean, we talk about the 2% measure. Um, uh, 2% threshold as being something that the Fed is looking for, you know, but they’re, they’re comparing it on their own past data.

And just because our says 2% doesn’t mean that, you know, any kind of threshold has been reached. But we do think that this mis measurement of rent is something that should be taken into account so that we have a better historical measure. I mean, we’ve been under 2% basically since, according to our measure.

Since basically about, I’m trying to feed the data here, certainly since, um, 2000, mid 2024, it looks like.

Wow. And

yeah.

Are we pretty stable, uh, in those numbers?

Yeah. It’s been like, like the actual CPI, our measure has been coming down. From, uh, from, mm-hmm. For us in two, mid, mid to early 2024 has been coming down from 3% down to about one point mm 8% right now, at the same time that the feds has been coming down from 4% to basically, yeah, 3%.

Yeah. Shifting gears a little bit, um, there’s another. Something, uh, that, that’s used that’s called the owner’s equivalent rent. Can you mm-hmm. Tell us what that is?

Yeah. I wish I knew that better. Yeah. Um, they’re, they, um, used to do it separately, but I guess it, I guess it got too expensive, but the owner’s equivalent rent, as I said before, but something that tried to get at housing cost.

For owner occupiers, we can’t observe rent. So what we do is we kind of, they kind of figure out the opportunity cost of, of your, the house that you live in and apply to that. Something called owner’s equivalent rent. And it’s, but it’s basically, I don’t wanna get into the weeds here ’cause I’m not sure of the weeds, but it’s basically using the same data that I described before.

In, in both cases, you’re basically looking at numbers are, are kind of falling. What does the song mean for Federal Reserve decisions on interest rates, basically, that that rates could be higher than they should be right now. Would that, is that a fair conclusion from what you’re finding?

Uh, well, it would depend on how you view our alternative measure.

Um, we’ve seen. That our, in our inflation rate with our index, um, uh, replacing the S’S rent index in the calculation of CPI, we have seen a fall in that two something, well, less than two per 2%. I’m looking at the chart here and it looks like it’s about 1.8% and. That is a percent, as you pointed out before, that’s a percent less

Yeah.

Than what the CPI officially shows. And if you fought that, chairman Powell should, um. Lower inflation, sorry. Lower interest rates when they’re, when inflation is below 2%, our contention is, is that true inflation is below 2%, but that would be unfair to him because he’s, that 2% number comes from a historical tracking of his inflation rate, which for years and years.

Was at two 2%, give or take, you know, 0.2 or 0.3 percentage choice

right. Now, what we could potentially extrapolate from this, correct me if I’m wrong, because if you’re looking at, like you said, contemporaneous data, that this should be predictive of the direction of core.

Yes, yes. If you looked at our inflation rate and their inflation rate, there is, we’ve done kind of the, the time series analytics of this.

Generally speaking, our inflation measure leads the, um, CPI inflation measure, whether it’s core, not core personal consumption, uh, expenditure index or the CPI by, you know, some number of months, six months, eight months. And again, looking at the data, you can kind of see that this is true. So, um, is

that,

would that,

is it leading it with actual numbers or is it leading with just directionality?

Just directionality. Uh, that’s because they’re, there’s a different basis that these things are kind of working off of. There’s different steady states for both of them. Uh, yeah. You would expect, um, the CPI to follow our measure and it kind of does, it’s not as dramatic as. Um, just following it in lockstep six, you know, six months later.

But there is a general tendency for them to move together with this lead lag relationship.

Right, right. So, but, but again, it’s not just like right now, I, I’m just trying to think of how to think of it. So, in a way, what your numbers are showing us are the directionality of what we. Should expect six months from now on core.

Right. That is that fair. We’re seeing and we’re seeing that, I mean, again, I’m looking at the data. You can go to the website. I’m not trying to advertise the website at all. No, I get it. It’s just,

and then when it’s

just that when

inflation was going up, were you capturing those higher numbers? Quicker than the Fed.

Yes. Than, than core wise. Absolutely. Talk a little bit about that.

Yeah. So again, looking at the, looking at the data, um, looking at my, our, my handy chart here, uh, there was a peak in rental inflation, you know, starting with the pandemic of course. And that’s an interesting subject in itself. You know, why did rents peak right after the pandemic?

But we saw rents rising. For several months and reaching an eight or 9% inflation rate, you know, in 2022.

Whereas the c the, at the same time, what was core showing at that? The

core was showing, uh, their peak reached, uh, it looks about three or four months later, maybe six months later. And their peak was at six, uh, six and a half, 7%.

Yeah.

And so, and then we saw a dramatic decline. Over the next six months, and then you see after that you see the CPI rent declining from its 6% teeth down to about 3%.

Why do you think the Fed doesn’t use some of these sort of numbers that reflect maybe more current data? I know a lot of people in, uh, companies and and institutions are starting to use, for example, they’re using that reflation number.

As well.

Right.

Um, I know people don’t necessarily know what FL is, and maybe, maybe you could just comment on some of these things.

Yeah, so there’s plenty of, uh, privately run inflation. There’s a billion prices project, which generally finds the same inflation as what the CPI does for goods and services.

Um, I actually don’t know what their, their rental index looks like. But if you’re just talking about rent, then you can look at, as I said before, Zillow. Um, apartments.com has an index. Um, other CoreLogic has an in, they’re not called CoreLogic anymore. Totalities Index is also available and they all show what we are showing, um, basically zero, uh, index.

Um, yeah. So there was another question in there. I,

well, the other question is, why do you think the, oh, yeah. Policy makers aren’t using, I mean, if there’s, because of the technology that’s, you know, being utilized here and, and, and the, it seems like there’s some pretty good data showing this data that this.

These numbers are leading indicators for what the core is going to be like. Why? Why wouldn’t they lean more on this?

Well, finally there’s been action taken. We were pleased that Chairman Powell in, I think it was fall of 24, acknowledged the problem with rental data. Uh, and I believe that was, that comment was generated by the fact that the economists at the Cleveland Branch.

Of the Federal Reserve, which has some very fine scholars finally turned their attention to this problem, did a systematic study where they found that if they used their own panels at, you know, the panels that I talked about at the beginning of the, of the podcast, if they took that data and treated it like we treat ours, and basically only look at members of the panel who had signed a new lease.

Better they’d sign a new lease with a new landlord. That’s the best kind of data to reflect current market conditions. That they get numbers which are very close to the kind of numbers that we get.

Yeah.

So they are paying attention and they can now, they’ve now recognized that they can do something similar to what we, and, you know, the other data providers, um, have by just using their own data in a different way.

And, um, we’ll, uh, maybe we’ll see some progress along those lines in the coming couple of years.

Uh, slightly different topic, but related, uh, valuations. Um, how reliable are residential appraisals, uh, in actually reflecting true market value right now?

That’s a great question. So, um, there’s two, there’s two different types of appraisals.

Right? Mm-hmm.

There,

there are appraisals for transactions. In other words, you go to the bank and you borrow, borrow money, the bank’s gonna send an appraiser. But what that appraiser almost always very often comes out with is just an appraisal that reflects the transaction price, which is already been proposed.

And that’s, you know, kind of what everybody wants. Um.

Those kind of appraisals are kind of not very good because they’re not really reflecting any independent valuation of the market. Is this, is this answering your question? Is this the thing you were asking about?

Yeah, I mean, I guess the question is of, you know, how accurate is it is and is there issues with methodology or incentives or

Yeah.

You know, or looking at backward looking comps, that kind of thing.

Yeah, so, so the other kind of appraisals, a refi. There, the appraiser actually has a real job. The appraiser needs to come up with an accurate valuation because there’s no transaction on which that app, that appraisal can get anchored. And generally, I think these are okay.

Um, the issue that comes out of a, we’ve noticed. Comes out of a study that we’ve just completed, some of the same authors from the, from the rental index stuff, um, which is that, uh, the appraisal can depend a little bit on the appraiser and very much on the, uh, borrower. And so there’s an issue with like racial, uh, I won’t say bias, but racial.

Undervaluation for minority owned households. That’s, that is definitely seems to be an issue. And our study about that indicates that that’s an issue regardless of whether the appraiser is black, white, Hispanic, or, or Asian or whatever, that the, that the undervaluation that is received by minority homeowners can be one to 4% less than.

What we think that the market value of, and we have to calculate that, but we, we think the market value of the, of that property is it’s, it’s one to 4% less than comparable homes, which are being refied by white households. There was a spate of newspaper articles about this problem around the time of the pandemic, and we thought, well, we better, let’s, let’s look into this.

And we found, yeah, there’s, there’s some. There’s some issues there. So, so that level, so the accuracy is not what it might be, um, for those households, but generally I think that they do reflect market value.

Where do you think the, uh, real estate markets may be most mispriced? I mean, if you like geography or anything like that right now?

mean, the answer to your question, I think is that there isn’t a lot of mispricing the way there was in the great housing boom of the nineties. Yeah. ’cause the, you know, the, um. The, the, the, uh, boom in housing prices that occurred around the time of the pandemic and afterwards, that was based on fundamentals.

Rents were rising at the same time that those prices were bumping up. And it had to do with changes in the housing market that occurred at the time of the pandemic. Um, there was just a big new demand for housing that wasn’t there before. Um, there are a lot of new households created. During the pandemic because people thought it better to not have roommates to live alone, move out from mom, dad, that kind of thing.

So there was a lot of new households created and a lot of shifting of housing demand. And that created a lot of price acceleration in the years of, and immediately following the pandemic now and that, and so it was reflected in rents too, so it wasn’t really mispricing. Um, but things have leveled out now.

Think people have, I guess, moved to where they wanna go. And so we’ve seen kind of a settling down of house prices as well. So I don’t see a lot of kind of aggregate mispricing out there. I, I, it’s, it’s possible that some, some places that were refuges for California residents when the pandemic hit places like boys here or Salt Lake City, I suppose they were mispriced.

Around that time. But again,

yeah,

pretty much everywhere settled down.

What are you seeing as sort of, um, particularly I guess with interest rates and if, if indeed those core numbers come down, monetary policy shifts a little bit, uh, and you know, bond yields go down, uh, do you anticipate sort of a recovery of this, uh, rental market anytime soon or what, do you have any thoughts on that?

The rental markets in equal seems like it’s kind of an equilibrium. I mean, the question is what if you, I think the, the, uh, a different question, which I thought you were, this is where you were going, is house prices. Are we gonna see any acceleration there? Because we’re eventually Not tomorrow. Not today, we’re gonna see mortgage rates come down.

It’s not happening yet, and I would’ve actually. Thought we’d see a bit of that, but we’re not, um, I guess we’re up at about 6%, which seems, which seems high and it’s

not. Well, it’s, it’s still probably, it’s still twice as much as people were buying.

Yeah. I mean, and

that’s during COVID, you know, and, and so a lot of people just aren’t gonna sell if they don’t have to.

Right. No, that’s, there’s a lot of mortgage lock, which as you just alluded to, it’s people who bought at very low interest rates and not wanting to sell because they’d have to bring in a higher, uh, mortgage rate. And that’s keeping a lot of property off the market. And that’s, you know, there certainly has been and continues to be a slowdown in the number of housing transactions that occur.

I get it.

And if it weren’t for builders, um. Some of whom are kind of lending to their buyers at lower than market rates. And we’ll see if they regret that at some point. But, but if it weren’t for them, there’d be hardly any home buying at all.

Yeah. And

so we’ll see. I at some point, interest rates and mortgage rates are gonna come down and that should unleash a lot of more transactions.

But yeah. Yeah, we’ll see.

Right. Well, good stuff. I appreciate your time today. Uh, Dr. Colson, um, we, we, can you tell us a little bit again about the website that people can go to or how they can learn more about your work?

Yeah, it’s a, um, the, the website is sites, SITE s.psu.edu/inflation. And that will show you all the data that we have combined in both graphic and, you know, kind of excel downloadable form.

And we show there the, uh, the rent data, um, and its, uh, impact on. Four different, I’m looking at it right now, four different inflation rates combined with the, uh, actual BLS, uh, data. So you can look at that and, and if people want to read the scholarly work on that, just look up there. The sites, uh, for those scholarly works are actually on that website, so you can take a look at all that stuff.

Thanks so much for joining us.

I appreciate it. Thanks for the opportunity.

You make a lot of money, but are still worried about retirement. Maybe you didn’t start earning until your thirties. Now you’re trying to catch up. Meanwhile, you’ve got a mortgage, a private school to pay for, and you feel like you’re getting further and further behind.

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Something happens to you. The concepts here are used by some of the wealthiest families in the world, and there’s no reason why they can’t be used by you. Check it out for yourself by going to wealthformulabanking.com. Welcome back to the show again. Again, I would just urge people to think about what’s going on right now in the Middle East as temporary, and if it’s temporary, that means the price of oil is not gonna stay high forever.

And when that all resolves itself, we could end up with a situation where oil prices and energy prices are even lower than they were before. And then you have all of this housing data catching up, and that could result in a pretty significant drop in core. Uh, inflation. But, uh, anyway, I think that’s important to think in context because if you just listen to the next CPI number and you say, oh my gosh, inflation’s back, well, that’s not really the whole story.

So it’s important to get the big picture. Anyway, that’s it for me. This week on Wealth Formula Podcast. This is Buck Joffrey signing off. If you wanna learn more, you can now get free access to our in-depth personal finance course featuring industry leaders like Tom Wheel Wright and Ken McElroy. Visit wealthformularoadmap.com.