The Unassuming Economist

From a new IMF working paper by Marco Gross, Thierry Tressel, Xiaodan Ding, and Eugen Tereanu:

“We present an analysis of the sensitivity of household mortgage probabilities of default (PDs) and loss given default (LGDs) on unemployment rates, house price growth, interest rates, and other drivers. A structural micro-macro simulation model is used to that end. It is anchored in the balance sheets and income-expense flow data from about 95,000 households and 230,000 household members from 21 EU countries and the U.S. We present country-specific nonlinear regressions based on the structural model simulation-implied relation between PDs and LGDs and their drivers. These can be used for macro scenario-conditional forecasting, without requiring the conduct of the micro simulation. We also present a policy counterfactual analysis of the responsiveness of mortgage PDs, LGDs, and bank capitalization conditional on adverse scenarios related to the COVID-19 pandemic across all countries. The economics of debt moratoria and guarantees are discussed against the background of the model-based analysis.”

On cross-country:

• Nevertheless, They Persist: Cross-Country Differences in Homeownership Behavior – SSRN
• Here are five policies to help solve the global housing crisis – World Economic Forum
• Residential Real Estate in a Volatile World – Barry Ritholtz  

On the US:    

• Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble – Dallas Fed and Bloomberg
• Can Home Prices and Interest Rates Soar at the Same Time? Rising mortgage rates are supposed to cool house prices. But this time could be different. – New York Times
• Faulty evidence and misdiagnosed solutions. Why centralizing appraisal standards and criteria under a new federal agency as proposed under the Fair Appraisal and Inequity Reform Act is not justified – AEI
• Rising Interest Rates Will Shift Housing’s Foundations. Some might be locked into homes they already own while new buyers opt for smaller homes in cheaper places – Wall Street Journal
• The Housing Boom Is Even Rewarding People Who Don’t Go Anywhere – Bloomberg  
• Homeowners Spin Soaring Prices Into U.S. Real Estate Riches. Cash-out refis enable newbie investors to buy second or third houses— or more — to capitalize on surging rental demand. – Bloomberg
• Residential inflation: The rise in the pipeline – VoxEU
• A Wasted Opportunity to Improve Housing Outcomes for Minorities. If the government sets home prices, it could have catastrophic consequences. – Wall Street Journal
• Nashville’s chart-topping house prices. Southern charm, a growing tech scene and low taxes draw ‘transplants’ to the country music capital – FT
• White House requests big HUD boost for housing supply – Politico

On other countries:  

• [Canada] Canada’s red-hot housing markets hint at cooldown as higher rates, inflation bite – Reuters
• [Canada] The divide between housing haves and have-nots is growing – will a politician exploit it? – Globe and Mail
• [Canada] Ontario bill aims to speed construction as house prices keep surging – Globe and Mail
• [Canada] Canadian house prices rising strongly despite pandemic – Global Property Guide
• [Canada] Foreign Buyers’ Tax Just Might Cool Ontario’s Hot Housing Market.  Rising rates and levies pushed prices down five years ago. Ontario is epicenter of real estate affordability crisis – Bloomberg
• [Germany] Germany’s Favorite Hedge Against Inflation? Real Estate. Inflation worries are pushing German house prices even higher, adding to the risk of an overshoot. – Bloomberg
• [Netherlands] The Netherlands’ house price boom continues strong – Global Property Guide 
• [Netherlands] Netherlands: house prices to rise more slowly in 2022 – ING
• [Norway] Norway’s modest house price rises – Global Property Guide
• [Romania] Romania’s house price growth accelerating – Global Property Guide 
• [Switzerland] Swiss National Bank says monetary policy not way to curb real estate risks – Reuters
• [Switzerland] Switzerland’s house prices stable – Global Property Guide 
• [Taiwan] Taiwan’s housing market growing stronger – Global Property Guide 
• [Vietnam] Vietnam’s housing market gathering pace – Global Property Guide