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WELCOME TO "MATTER OF FA." THERE’S A NEW SOURCE OF ANXIETY FOR AMERICAN FAMILIES -- INFLATIO N! PRICES ARE UP ON EVERYTHING FROM FRUIT TO FURNIRETU IT’S THE RESULT OF AN INFLATION RATE THAT HIT 7% IN DECEERMB ANOTHER SECTOR WHERE INFLAON IS MAKING AN IMPACT IS HOUSING. THE MORTGAGE BANKER’S ASSOCIIOATN SAYS RATES FOR A 30-YEAR LOAN WILL LIKELY HIT 4% BY THE END OF THIS YEAR. RENTERS ARE FACING AN EQUAYLL TOUGH MARKET. THE REAL ESTATE FIRM REDFIN ESTIMATEAVS ERAGE RENTS ROSE 14% LAST YR.EA SOME CITIES LIKE MIAMI AND AUSTIN ARE UP NEARLY 4. THE INCREASED COSTS ARE MAKING HOUSING UNAFFORDABLE FOR MILLIONS OF AMERICS. FRANK NOTHAFT IS THE CHIEF ECONOMIST AT CORELOGIC, A FINANCIAL SERVICES COMPANY THAT ANALYZES THE HOUSING MKEAR SO NICE TO TALK TO YOU, THANK YOU FOR YOUR TIME. SO, LAST YEAR, WE KNOW THAT RENTS ROSE 14% ON AVERAGE. BUT SOME CITIES, AS I MENTIONED, LIKE NEW YORK AND MIAMI, 4, THAT’S AN INSANE INCREASE. WHAT’S ACTUALLY DRIVING THIS RISE FRANK: IT’S THE SHORTAGE OF HOUSING. WE’RE HAVING A SHORTA OGE RENTAL HOUSING AND WE’RE HAVGIN A SHORTAGE OF HOMES AVAILABLE FOR SALE ON THE MARKETPLACE. SOLEDAD: IS THERE AN IMPACT OF INFLATION ON HOUSING? FRANK: WHAT WE’VE SEEN IS THAT THE INFLATION THAT WE’VE SEEINN HOME PRICES AND RENTS HAVE MADE IT MORE CHALLENGING FOR PROSPECTIVE FIRST TIME HOOSPECTIVE FIRST TIME MEBUYERS IN PARTICUL.AR BECAUSE IF YOU’RE A FIRST TEIM HOME BUYER AND HOME PRICES A UP DOUBLE DIGITS, THEY ARE UP 18%, 20% IN SOME MARKETS, AND THAT MEANS THE NEST EGG, THE SAVINGS THAT YOU NEED TO ACCUMULATE IN ORDER TO AFFORTO BUY YOUR FIRST HOME, THAT’S ALSO UP 20%. BECAUSE THAT NEST EGG GOES TO A DOWN PAYMENT, THE CLOSING COST TO SETTLE THE TRANSACTION AND TO VEHA SOME CASH IN RESERVE AFTER YOU SETTLE ON THE HOME, YOUR RAINY DAY FUNDS. SO THAT NEST EGG HAS TO GROW 20% IN ONE YR.EA SOLEDAD: IF YOU’RE A FIRST TEIM HOMEBUYER, ARE YOU JUST OUT OF LUCK? BECAUSE, YOU KNOW,IT WH THOSE INCREASED PRICES AND SOROFT THE INCREASED COST OF DOING EVERYTHING, IT JUST SEEMS LIKE -- I DON’T KNOW WHAT THE FIX FOR THAT COULDE. B IS THERE ONE? FRANK: THINK ABOUT THE REAL CRICITAL ELEMENTS THAT YOU NEED TO HAVE IN YOUR HOME. HOW MANY BEDROOMS? HOW MANY BATHROOMS, DO YOU NEED TO HAVE THE OFFICE FOR THE HOME? WHAT DO YOU EDNE AND THEN MAYBE LOOK AT THAT SMALLER SET OF HOMES THAT VEHA THE CRITICAL ATTRIBUTES THATOU Y NEED TO HAVE IN YOUR HOME. SOLEDAD: JT USTHE OTHER DAY,E W DID A STORY ON THE HGTV NETWORK SHOW THAT THEY HAVE CAED "BARGAIN BLOCK" AND IT’S ABOUT A COUPLE. THEY GO TO DETROIT AND THEY FIX UP ABANDONED AND RUNDOWN HOUSSE AND PUT THEM BACK ON THE MARKET. AND ONE OF THE THINGS THAT TYHE SAW WAS THE REAL RACIAL DISPARITY IN WHO’S ABLE TO GET LOANS, RIG? WHO GETS ACCESS TO MORTGAGES, IF YOU’RE TALKING ABOUT PEOPLE O WHARE ALREADY FINANCIALLY DISADVANTAGED AND ALSO PEOPLOF COLOR, WHERE GETTING THE MORTGAGE IN THE FIRST PLACE MIGHT BE A BIGGER CHALLENG FRANK: SOME OF THIS IS A LEGACY, SADLY, OF THE DISCRIMINAONTI AND REDLINING THAT OCCURRED IN THE UNITED STATES OVER MY, MANY YEARS. FOR FAMILIES WITH LOWER AND MODERATE INCOME, HOMEOWNERSHIP HAS BEEN A CRITICAL ELEMENT IN GENERATING WEALTH OVER TIME DAN GROWING WEAL. BUT FOR MINORITY FAMILIES, THE HOMEOWNERSHIP RATE HISTORICALLY HAS BEEN MUCH LOWER THAN FOR WHITE FALIMIES. AND SO THAT’S BEEN A CHALLENGE IN BUILDING THAT WEALTH, BUILDING THOSE ASSETS THAT PARENTS N CASHARE THEN WITH THEIR KI. SOLEDAD: SO WHAT’S YOUR PREDICTION AS YOU LOOK THROUGH 20? FRANK: I THINK WITH MORTGE RATES RISING AND HOME PRICES BEING SO ELEVATED, THAT’S GOING TO REALLY PUT A SQUEEZE ONHE POCKETBOOKS, ESPECIALLY FOR SOME OF THE MARGINAL PROSPECTIVE HOME BUYERS IN THE MARKETPLE.AC SO I DO EXPECT TO SEE THAT HOME BUYING DEMAND WILLE BTEMPERED QUITE A BIT OVER THE COURSE OF THE NEXT SEVERAL MONTHS. THAT’LL REDUCE SOME OF THAT PRESSURE WE’RE SEEING ONE H PRICES AND THE BUYING MARKET IN SO MANY MARKETS AROUND THE COUNTRY. SOLEDA FD:RANK NOTEHAF