The Unassuming Economist

A new IMF Working Paper by Richard Koss says that “It has been over a decade since the peak of house prices in the US was attained, and while there has been a concerted regulatory response to the subsequent collapse, the two Government Sponsored Enterprises (GSEs) remain in conservatorship. While this action served to forestall a deeper crisis at the time, over the past several years risks related to the system of mortgage finance can be seen building across several dimensions that need to be addressed. While reforms to the GSEs are an important part of dealing with these concerns, this paper argues that broader changes need to be made across the entire mortgage landscape to stabilize the system, even before the final state of the GSEs is fully determined.”

Continue reading here.

On cross-country:

• Housing in Euro Area – IMF

On the US:

• Why Has Regional Income Convergence in the U.S. Declined? – NBER
• 2017 Profile of International Activity in U.S. Residential Real Estate – National Association of Realtors
• Remarks of Melvin L. Watt at the National Association of Real Estate Brokers’ 70th Annual Convention – Federal Housing Finance Agency
• Matthew Desmond Q&A: Housing Insecurity Is a Problem We Need to ‘Out-Hate’ – Zillow
• Tenants Under Siege: Inside New York City’s Housing Crisis – The New York Review of Books
• Why is Moving to a New Home Worse for African-American and Hispanic Children than for White Children? – Harvard Joint Center for Housing Studies
• Housing Policy Should Prioritize Those With Greatest Need – Center on Budget and Policy Priorities
• Where Does Job Growth Outpace New Housing Construction? – National Association of Realtors
• The Sharing Economy and Housing Affordability: Evidence from Airbnb – SSRN
• Residential Rent Affordability across U.S. Metropolitan Areas – Federal Reserve Bank of Kansas City
• Mortgage Default in an Estimated Model of the U.S. Housing Market – Banco de México
• Understanding the Surge in Commercial Real Estate Lending – Federal Reserve Bank of Richmond
• Increase in Long Commutes Indicates More Residential Dispersion – New Geography
• The Great Train Robbery: Urban Transportation in the 21^st Century – Chapman University

On other countries:

• [Australia] Quarterly Housing & Economic Review – July 2017 – CoreLogic
• [Canada] Vancouver plan to boost housing supply ignores city hall red tape – Fraser Institute
• Japan: Risks Emerging from Real Estate? – IMF
• [Singapore] Housing Market in Singapore – IMF
• [Turkey] Real estate purchases by foreigners drop in Turkey, despite generous incentives – Global Property Guide
• [United Kingdom] British homeowners move home half as frequently as Americans do – The Economist
• [United Kingdom] How the credit crunch transformed the UK housing market – Savills
• [United Kingdom] Making the Case for Affordable Housing on Public Land – New Economics Foundation

From a new IMF report on Japan:

“Housing prices have been on the rise in some geographic areas and market segments, despite the declining population. Condominium prices have increased by 23 percent at the national level since 2013 (Figure 8). Historically low mortgage rates and recent changes in the inheritance tax are contributing to demand pressures, with little response in the number of new houses put on the market. Some overheating in the housing market is also indirectly suggested by house price-to-income ratios. Growth in real estate loans has been higher than other loans and the amount outstanding by domestic and Shinkin banks reached a record high at end-December 2016 (FSR, April 2017).”

 

 

“Condominium prices appear to be moderately overvalued in Tokyo, Osaka, and several outer regions. While results should be interpreted with caution given data limitations and model uncertainty, an econometric analysis using city data shows that condominium prices in Tokyo and Osaka started exceeding values predicted by fundamentals in 2013, suggesting an overvaluation in the 15−20 percent range. A regional analysis also indicates that condominium prices may be moderately above their equilibrium values, with the degree of overvaluation in the 5−10 percent range (Figure 9).”

 

A new IMF report on Singapore says that: “In Singapore, property market stability is closely linked to macroeconomic and financial stability. Property is the largest component of household wealth, representing about half of total household assets. Mortgage loans account for some three-quarters of total household liabilities, and property-related loans form a substantial portion of banks’ loan books. In addition, housing affordability is a key concern for the Singapore public (Lum, 1996 and 2011; Phang, 2015; Phang and others, 2013). Therefore, when property prices rose rapidly shortly after the Global Financial Crisis (GFC), the Singapore authorities responded with a series of macroprudential measures, including fiscal-based measures, to promote a more stable and sustainable property market. ”

The report also says that: “Finally, Singapore’s banks are well-positioned to withstand shocks from the property market, partly as a result of macro-prudential tightening. Average loan-to-value ratios are low, loan-loss coverage is adequate, and capital and liquidity buffers are strong. Households also have healthy balance sheets and well-diversified assets. ”

On international comparison, the report  says that “In Hong Kong SAR, Singapore, and Taiwan Province of China, property tightening measures in recent years have achieved different results. Since peaking in 2013, house prices in Singapore have declined gradually to 2010 levels. The impact contrasts with Hong Kong SAR, where prices have continued to rise and mortgage growth has shown no clear downward trend. House price growth has also remained rapid in New Zealand and Australia where tightening began in 2013 and 2014 respectively. Hence, there is significant liquidity in the regional markets calling for continued vigilance and careful calibration of the measures to guard against speculative capital inflows that can hamper financial stability.”

The IMF’s latest report on the U.S. says that: “After a prolonged deleveraging, the housing sector is showing healthy growth.”