Many of us believe that, like any other consumer good, when there is inflation, housing prices automatically go up. The truth is that this is not entirely true. We see housing as a sort of hedge fund, expecting it to at least keep some of its current value. When there is a high inflationary environment, most of the time prices will go up on housing. This includes rental rates as well as the cost to build new housing. This increases the price of houses already on the market. This is what we assume will happen. As a vendor and supplier of metal decking roofs to those home builders who got destroyed in 2008-2009, I can tell you first hand this is not always the case.
There is an obvious relationship between the two, but inflation sometimes will have a negative impact on housing prices. You can see this reflected in the housing prices of the last few years. Moderating factors such as overabundance will affect the housing market. The housing boom 2008-2009 created a surplus of new homes.

Another moderating factor is the fact that mortgage interest rates increase along with inflation. If the rates get extremely high no one will want to take out a mortgage. Housing prices will decrease because the demand has decreased. When inflation runs rampant it is harmful for the economy. This can be seen most readily if you look at those people who are on a fixed income. Inflation makes the value of the dollar decrease and competing in the global market becomes strained.

Predicting inflation and its possible effects is not an exact science. There are so many factors that can affect the results it has become virtually impossible to predict how it is going to turn out. There are signs that can be seen long before the actual effects are being felt. One of the harbingers of inflationary economic doom is when the government loads large amounts of money into the economy.

Inflation in the housing market is harder on renters. As the number of home owners increases the number of rentals also increases. This means that the supply of rental units far exceed the demand. With fewer people looking to rent the landlords have no choice but to increase the rental rates. Their expenses are still the same, if the building has 45 units and they can only rent 10, they are operating at a loss. The mortgage, insurance and other expenses remain the same; some of those even will increase during times of inflation. The relationship between inflation and housing is as complex as any marriage, it takes years to sort it all out and be able to come to grips with its many moods.