Despite surging home prices
that are rising at the fastest pace on record, the Federal Reserve continues to prop up the housing market by purchasing $40 billion of mortgage bonds each month.
And while the Fed is finally “talking about talking about”
removing some of its support, some fear the US central bank is creating another housing bubble as it deliberates.
That’s because the Fed’s emergency strategy is artificially lowering the cost of mortgages, and further boosting prices that already looked stretched in many markets.
“The Fed just continues to pour more gasoline on that fire,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Of course, the central bank certainly deserves credit for its historic efforts to prevent the Covid recession from morphing into an all-out depression.
Springing into action early last year after the pandemic hit, the Fed rapidly slashed interest rates to zero, launched emergency…