Inflation, Interest Rates, and Housing

Over the past several years, rising prices have reshaped how households, businesses, and investors make decisions. Inflation, higher interest rates, and affordability pressures now define conversations around housing, development, and long-term growth. While recent data suggests inflation has moderated, the cumulative impact of price increases since 2020 continue to influence buyer behavior, rental demand, construction activity, and capital allocation across the real estate landscape. 
 
Inflation is the economic term for rising prices. Too much inflation is harmful to households and the economy overall. Periods of elevated inflation are not new, and history offers useful context for understanding how today’s environment may eveolve. In the late 1960’s and 1970’s we had three waves of inflation, each higher than the last. The final wave of inflation ended in 1981 with 18% interest rates and a difficult recession. The rising cost of food, fuel, and housing the 1970’s weighed heavily on the Carter administration and set the stage for the Reagan supply side economics revolution.  
 
In recent years, we have been following a similar trend. Since 2020, the cost of goods and services has increased by 25% on average. The price of homes has increased by more than 50% in some states. The stock market, as measure by the S&P500, has increased by 112%. 
 
Although by today’s estimates inflation appears to be under control, if we were to follow the trend from 50 years ago, it would mean a third wave of rising prices across the economy. One of the biggest drivers of inflation is the United States deficit and debt. The Trump administration pared back the federal deficit in 2025, but we are still looking at $1.5 trillion more spending than revenue. The administration is hoping lower interest rates will cut the deficit further, but persistent deficit spending could ignite a third wave of inflation across the economy. Another round of rising prices would be devastating. 
 
Inflation hurts the young and the old in our communities. Homeowners typically benefit while renters see costs rise. First-time buyers find purchasing more difficult. Young families and retirees are usually hit the hardest. 
 
I am doing all that I can to advocate for policies that help Utah residents with cost of living. While Utah state policy doesn't have the potential impact that federal policy does on inflation, I am supporting policy that will lower the price of gasoline, keep electricity and power costs affordable, and assist with home ownership and housing attainability.

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