January 2025 Erdmann Housing Tracker Update and Inflation

Here’s a quick reminder of the elephant in the room. This is the Zillow estimate of home price changes in the 40 largest metro areas in the 8 years leading up to December 2007 and the 8 years leading up to December 2024. The average in both cases is just over 50%. But the distribution is very different.

If you were looking for causes of price trends, you’d be looking mostly locally in the 2000s and nationally today. Academic literature on home prices in the 2000s frequently starts by controlling for regional differences. Seriously.

Figure 1

The CPI inflation numbers were updated last week. There was a bit of a bump up in January. Whether this is noise, reaction to Trumpian chaos, or a new trend will take a few more months to tell. But, in the meantime, let Figure 2 be a reminder that when you exclude shelter (which you should do), prices have been moving very tightly along the 2% target path for quite some time. (The blue lines are moving sideways.)

Figure 2

More details on home price trends and on housing and inflation for subscribers below.