Mr. Freeze! Natural Gas Futures UP 5.53% This Morning (UP 255% Under Biden), Housing Square Footage Goes Up With Fed Easing (Stay Warm!)

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by confoundedinterest17

You better hope it doesn’t get Cold Outside. Because the cost of heating your house just rose 5.74% this morning (natural gas futures). To $9.01.

Between Biden’s anti-fossil fuel policies and the war in Ukraine, natural gas futures are up 255% under Biden.

With rising natural gas prices, one would think American consumers and American home builders would start building higher-density housing like duplexes.

But The Federal Reserve has helped America build BIGGER houses (as in greater square footage).

Note that following the financial crisis and the takeover of the US economy by The Fed, median square footage of US housing starts rose with Fed easing. Median square footage started falling as The Fed leveled-off its asset purchases (green line). But when Covid struck and The Fed really went to town (aka, monetary stimulypto), median square footage started rising again.

The above chart demonstrate the conflict that can arise between a Presidential Administration and The Federal Reserve. President Obama wanted more green apartments built and less suburban growth, but thanks to The Fed, we got median square footage of new builds rising. But once The Fed took its enormous foot off the monetary accelerator pedal, median square footage started falling. Then Covid struck, The Fed intervened, and median square footage rose again.

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But with alleged Fed monetary tightening, we should should see the demand for larger homes decline relative to smaller homes.

Mortgage rates have been climbing rapidly, making housing acquisition relatively less affordable.

Black Knight’s monthly P&I payment to average purchase price says it all.

My version of the Black Knight chart is slightly different, but tells the same story: home prices and mortgage rates are rising FAST with Fed stimulus, but should slow down.

I guess we can call both Biden and Fed Chair Powell jointly “Mr Freeze” for housing.

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The Fed has helped make housing not only more expensive, but larger in size. And the Biden Administration and war has helped make heating those large houses more costly.

 

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