"The (Real) Rent Is Too Damn High"
Ironic, innit? But the issue here is that inflation raises the general economy-wide nominal price level. If you took every single price in the United States and moved the decimal point one notch to the right you’d have inflation. But everything would actually be the same. Nobody would have actually gotten a 1,000 percent raise and nothing would really be 1,000 percent more expensive. It’d just be different prices. The problem of high rent in key urban areas, by contrast, is a problem of relative price increase. An apartment in Manhattan or San Francisco or a house in Fairfax or San Mateo County is becoming more expensive relative to other things. That’s not monetary funny business, it’s real scarcity of houses relative to demand. If we kept everything in housing policy the same but started running deliberately deflationary monetary policy, then probably nominal house prices would fall. But that wouldn’t make housing more affordable for anyone in real terms.