The Unassuming Economist

A new IMF report on China says:

• “China’s real estate market rebounded sharply after a temporary slowdown in 2014-2015. The tightening measures since late 2016 seem to have dampened market activity, but house prices and sales remain strong, particularly in smaller cities.”

• “Risks are significant on the downside. If house prices rise further beyond “fundamental” levels and the bubble expands to smaller cities, it would increase the likelihood and costs of a sharp correction, which would weaken overall growth, undermine financial stability, reduce local government spending room, and spur capital outflows.”

• “To stave off such risks, the increasing intensity of macro-prudential and city-specific policies is appropriate, given the diversity in housing conditions, and should continue to be deployed to ensure a smooth adjustment. The government should expand its toolkit to include additional macroprudential measures including more active use of debt servicing-to-income (DSTI) caps and capital requirements on banks’ exposure to the real estate sector.”

• “A longer-term solution to manage better the frequent house price cycles is to introduce recurrent property taxes, resolve land supply constraints in large cities, mitigate local governments’ reliance on land sales, and accelerate reforms of the social security and “hukou” systems.”

On cross-country:

• Prime Global Cities Index – Knight Frank

On the US:

• Stabilizing the System of Mortgage Finance in the United States – IMF
• Robert Shiller on The Transformation of the ‘American Dream’ – New York Times
• Was there a Housing Price Bubble? Revisited – Marginal Revolution
• Appraising Home Purchase Appraisals – Federal Reserve Bank of Philadelphia
• Finding Common Ground for Land-Use Regulation Reform – Cato Institute
• Significant Improvements in Energy Efficiency Characteristics of the US Housing Stock – Harvard Joint Center for Housing Studies
• Housing Sentiment Dips as High Home Prices Weigh on Buyers and Economic Conditions Weigh on Sellers – Fannie Mae

On other countries:

• [Australia] Mapping the market shows a substantial decline in affordable housing supply in Sydney and Melbourne over the past five years – CoreLogic
• [Canada] New mortgages continue to rise in Canada – CMHC
• [United Kingdom] Housing is a growing political problem for the Conservatives – The Economist
• [United Kingdom] How to solve Britain’s housing crisis – The 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).”