So the Feds trying to calm down the crazy housing market raised interest rates, making it much more expensive for those getting mortgages to purchase a home.

Doesn't this just hurt the average bloke while making it that much better for the all-cash buyers and corporations that are buying up homes like crazy and turning them into rentals at inflated prices?

It seems like the Feds are hurting the average citizen while benefitting the wealthy who are going to get even wealthier by keeping folks stuck in the rental trap. Am I reading this situation wrong?

1. The Fed raising rates is not targeted at the housing market, what ever happens in the housing market is a secondary effect. The fed is targeting inflation.

2. Corporate buyers are about 25% of the market, prices will be still be set by joe blow buying houses.

3. If Joe blow stops buying houses, because they cant afford current prices at X% interest, prices will correct to a more affordable level, probably over correct and fall for other wider economic reasons.

4. This is actually better for joe blow, as it means a lower deposit making it easier to get on the ladder.

5. Also if housing stops exploding as an asset class corporates/banks etc will stop buying and potentially sell adding more downward pressure on prices, again good for JB.

U have it backward .
High interest rates means the value of money going up .
The currency where people get their wages from goes up in value .
Purchasing power goes up meaning prices of goods , stock and houses goes down .

Problem ?
Possibly it will bankrupt companies , creating a recession and people losing their jobs .

Tough balancing act between a currency strong enough to empower workers but not strong enough to make it too costrky for corporations to make profits and creating jobs .

I thought the corporations were buying up the homes in droves and turning them into rentals, making it harder on the average joe to enjoy home ownership, and instead be stuck in the rental trap, with prices being absolutely bonkers.

In my area if you want to RENT a 3 bed 2 bath home it's going to cost you like 3-4 grand/month.

Didn't read thread, but why not let the markets decide and just ditch the Fed altogether. What a scam institution.

Yes because of Inflation , purchasing power of your money being weak -> low interest rates .

Companies have a lot more cash and assets at hands compare to an individual .
So when interest rates are low , corporations can borrow a lot more cheaply against there assets , driving prices up at the expense of regular people .

Until the fed prevent a depression 1930s style due to war , pandemic or bad economics events , by printing money (lending cheap money to government) .

Did the fed involve itself too many times preventing normal business cycle ?
Absolutely .
They should be limited to crisis intervention .

Why do you think the above? Loltubes?

Sure they have increased their activity in the market, but are still around 25~ of the total market.

House prices are high because interest rates have been so low for so long, if you make it cheaper to borrow money to buy a house, effectively increasing the liquidity going into the housing market, of course prices will increase dramatically.

So we should allow private entities to collude and set interest rates, control the money supply and regulate financial markets as they see fit ?

I honestly can't see what could go wrong. Sure. Let's give it a go.

Agree. Same way the stock market operates. And everything. Markets set prices. Supply and demand.