The US housing market has settled into an unusual state that is leaving nearly everyone dissatisfied at once — buyers priced out, sellers reluctant to list, and renters facing tight supply — a dynamic that economists trace back to a structural shortage compounded by a generation of baby boomers who are neither selling nor downsizing at the pace prior housing cycles would predict.

A Market Where No One Is Winning

The current housing environment defies the usual buyer’s-market-versus-seller’s-market framing. According to reporting from NPR’s Business Story of the Day, the US housing market is “pretty weird right now,” with unresolved questions dominating the conversation for buyers, sellers, and renters alike: how the country ended up with a persistent housing shortage, whether housing remains a good investment at current prices, and what policy levers might unlock the substantial housing inventory currently held by baby boomers who are ageing in place rather than downsizing.

Redfin’s chief economist Daryl Fairweather has been a central voice in unpacking the dynamic, according to the same NPR coverage, pointing to a market where elevated mortgage rates have discouraged existing homeowners from selling and trading up — the so-called “lock-in effect” — even as new household formation continues to outpace new construction in many metro areas.

The Boomer Inventory Question

Central to the current impasse is a demographic puzzle: a large cohort of baby boomers occupies housing stock that would, under historical patterns, typically be turning over to younger buyers by now. Instead, many are remaining in place — whether due to strong attachment to low pre-pandemic-era mortgage rates, limited appealing downsizing options, or simply ageing in communities they have lived in for decades. The result is a persistent supply constraint that policy discussions have increasingly focused on unlocking, though consensus on the right mix of incentives — tax policy, zoning reform, or targeted senior-housing development — remains elusive.

Why This Matters for the Broader Economy

Housing affordability sits at the intersection of several major economic storylines currently playing out in Washington. It factors directly into the inflation data the Federal Reserve is weighing at its July policy meeting under new Chair Kevin Warsh, given shelter costs’ outsized weight in core CPI calculations. It also intersects with household debt management: financial experts continue to recommend building emergency savings and prioritising credit card payments specifically to avoid the “hamster wheel of debt” that can result when unexpected housing-related costs — a broken furnace, a rent increase, a failed home sale — collide with tight monthly budgets, according to the same NPR reporting.

A Market Increasingly Segmented by Region and Income

The “weirdness” of the current market is not uniform. Some regions continue to see meaningful price appreciation and tight inventory, while others — particularly in parts of the Sun Belt that saw rapid pandemic-era construction — have seen prices soften as new supply catches up with demand. That regional divergence complicates any single national narrative about whether housing remains “a good investment,” a question that increasingly depends on which metro area, price tier, and time horizon a buyer is evaluating.

What to Watch

The Federal Reserve’s rate decisions through the remainder of 2026 will remain the single biggest lever affecting mortgage affordability, while any legislative movement on zoning reform or incentives targeting boomer-held inventory could meaningfully reshape supply dynamics over a multi-year horizon. In the meantime, the market’s current equilibrium — unsatisfying for nearly every participant — appears likely to persist without a clear near-term catalyst for change.

Asia Pacific travellers have a 50% higher intention to increase travel spending than those in Europe and the US, cementing the region’s position as the world’s growth engine for travel. According to one study, 88% of global travellers plan to increase or maintain their travel budgets in 2026.

China’s outbound market is the powerhouse. China’s outbound travel in 2026 is projected to exceed 225 million trips, surpassing pre-pandemic levels and marking a transition from recovery to a structurally different phase of growth. Chinese travellers report the highest expected mean spend at **$7,748 per international leisure trip**, followed by Australian travellers at $7,124 and Indian travellers at $5,154. International visitor spending in China rose by 10.5% to $135 billion, exceeding pre-pandemic levels and outperforming the global average growth of 3.2%.

The World Travel and Tourism Council expects China’s travel and tourism sector to grow 7% annually over the next decade, contributing $3.8 trillion to GDP by 2035. China is on track to surpass the US as the world’s leading travel and tourism economy.

Corporate travel is also booming. Business travel expenditure across Asia Pacific is forecast to reach $70.09 billion in 2026, marking a year-on-year increase of 10.9%. The region is expected to contribute more than 40% of total global outbound business travel spending, underlining APAC’s central role in international commerce and aviation growth. China alone is projected to account for $40.8 billion of this spending — 58% of the regional total.

What’s driving this surge? Expanding visa-free access, a stronger yuan, and pent-up demand from Chinese consumers eager to explore the world. MMGY’s survey of 4,000 travellers shows that Chinese and Indian travellers are planning 3.2-3.5 trips annually versus 1.9-2.3 for Australia, Japan, and South Korea. The destinations winning Chinese travellers are those offering premium experiences, seamless digital payments, culturally resonant offerings, and visa facilitation.

The spending differential is significant. Chinese travellers not only travel more frequently but spend substantially more per trip than travellers from other major Asia Pacific markets. This makes them the most coveted segment for destinations worldwide, driving intense competition among tourism boards to attract and retain Chinese visitors through targeted marketing, direct flights, and culturally tailored experiences.

The Indonesian rupiah has weakened 3.6% year-to-date as of late April, making it the second-worst-performing currency in the Asia-Pacific region after the Indian rupee, even as Bank Indonesia has held its benchmark interest rate steady at 4.75% for a seventh consecutive meeting in an effort to defend it, according to McKinsey’s Southeast Asia quarterly economic review.

Growth Is Strong. The Currency Doesn’t Care.

The rupiah’s weakness is especially striking given that Indonesia’s underlying economy is performing well by regional standards. GDP expanded 5.61% in the first quarter of 2026, the fastest pace in more than three years, driven by a surge in government spending and strong household consumption tied to Eid festivities, McKinsey’s analysis found. Foreign direct investment into Indonesia grew for a second consecutive quarter, rising 8.1% to 249.9 trillion rupiah, roughly $14.5 billion, with Singapore remaining the largest source of that investment at $4.6 billion, followed by China, Japan, Hong Kong, and the United States.

That combination, strong growth alongside currency weakness, reflects a familiar emerging-market dynamic: Indonesia’s fundamentals are solid, but its currency remains exposed to global risk sentiment and capital flows that have little to do with domestic performance. Inflation rose to 3.48% by the end of the first quarter, moving closer to the upper bound of Bank Indonesia’s 1.5% to 3.5% target range, marking the fourth consecutive quarter-end increase as the weaker rupiah made imported raw materials more expensive, McKinsey’s report notes.

Bank Indonesia’s Defense Strategy

Faced with this pressure, Bank Indonesia has signaled readiness to step up both onshore and offshore foreign exchange intervention to curb currency weakness and keep inflation within its target range, according to reporting from Edge Malaysia cited in McKinsey’s review. Holding the policy rate steady for seven straight meetings represents a deliberate prioritization of rupiah stability over further monetary stimulus, even as growth data suggests the central bank could otherwise have room to ease.

The strategy carries real costs. Sustained intervention draws down foreign exchange reserves, and if the rupiah’s depreciation trend continues, as it did further into April beyond the 3.6% year-to-date figure, Bank Indonesia may eventually face a choice between more aggressive rate action and accepting a weaker currency alongside higher imported inflation. Regional context offers little comfort: Malaysia’s central bank governor has separately noted that most Southeast Asian currencies, apart from the Chinese renminbi and Singapore dollar, have weakened against the US dollar this year, including the rupiah, Philippine peso, South Korean won, and Thai baht.

De-Dollarization as a Longer-Term Hedge

Indonesia is simultaneously pursuing a structural response to currency vulnerability: reducing its reliance on the US dollar for regional trade altogether. Bank Indonesia officially joined Project Nexus as its sixth participating jurisdiction in February 2026, part of a broader Southeast Asian push toward multilateral digital payment connectivity, according to Travel and Tour World’s coverage of the initiative. Bilateral transaction volumes using local currencies between Indonesia and China surged to a $6.23 billion equivalent from January to July 2025, up sharply from $2.17 billion during the same period the prior year.

The country has also completed a rigorous sandboxing phase for cross-border QRIS-to-Alipay and UnionPay connectivity with the People’s Bank of China, soft-launching the system on June 11, 2026, and separately initiated cross-border QR payment connectivity with the Bank of Korea on April 1. Programs like QRIS SIAP have been deployed across the archipelago to help rural merchants and small businesses adopt these digital payment rails safely, part of a broader financial literacy push accompanying the technical rollout.

What the Iran War Adds to the Equation

Indonesia’s currency and inflation challenges are compounding an existing vulnerability to the global energy shock triggered by the Iran conflict. As a significant energy importer, Indonesia faces the same imported-inflation pressure affecting economies from the UK to Malaysia, but with the added complication of a currency already under depreciation pressure before the conflict began. That combination, a weakening rupiah plus higher global energy costs, creates a more difficult policy environment than either factor would present alone, since currency weakness itself makes imported oil and gas more expensive in local-currency terms, amplifying the direct price effect of the Strait of Hormuz disruption.

The Path Forward

Bank Indonesia’s next moves will likely hinge on two separate but related questions: whether global risk sentiment stabilizes enough to ease pressure on emerging-market currencies broadly, and whether the Iran war’s energy price effects continue moderating as they have through the second quarter. Until then, the central bank appears committed to its current approach, prioritizing currency stability through direct intervention and rate policy while building out longer-term structural alternatives to dollar dependence through regional payment integration, a two-track strategy that reflects Jakarta’s recognition that currency vulnerability cannot be solved through monetary policy alone.