A link between home values and retail prices could add to deflation concerns.
Store-owners who see local home values go up may want to raise prices
During the Great Recession, low interest rates and stimulus programs encouraged banks to offer borrowers more credit, but most of it went to the consumers who needed it least—and for whom it had the smallest impact on spending.
Higher home prices lead to higher household spending, according to recent academic research. But New York University's Johannes Stroebel and Chicago Booth's Joseph S. Vavra argue that rising prices also lead to retail price inflation.
Economists and policymakers have yet to reach a consensus about how much we should pay now to avert this catastrophe, but research suggests we may want to pay hundreds of billions of dollars today to ward off trillions in future damages.