Whether regarding markets or financial planning, I often talk about directional accuracy as being the most important goal. The chart below really highlights this concept with respect to housing, specifically what national home prices should look like at any given mortgage rate. This isn’t used to make timing predictions (which is never our goal), but rather to understand the most likely outcomes for a particular scenario. Current home prices aren’t in line with historical norms, and they currently reflect a 30yr mortgage rate closer to 2.5%, while the actual current mortgage rate is closer to 7%. So either mortgage rates are ~180% higher than they should be, or home prices are ~150% higher than they should be…Which one do you think is more likely? (hint: The Fed may already know the answer).