The Unassuming Economist

On cross-country:

• The Right Tool for the Job? Mortgage Distress and Personal Insolvency during the European Debt Crisis – IMF
• A Recession Is Coming, But the Housing Market Won’t Trigger It – Bloomberg
• Global Luxury Home Prices Fall for First Time Since 2009. New Zealand leads drop, while Dubai bucks the trend with a 44% surge. – Bloomberg

On the US—developments on house prices, rent, permits and mortgage:    

• Will Affordable Mortgages Ever Return? – Zillow
• New Home Listings Plunge 21% With Higher Rates Spooking Sellers. With borrowing costs up, many homeowners are ‘locked in’ at lower levels and hesitant to list their properties. – Bloomberg
• Have Home Prices and Mortgage Rates Both Peaked? A Hopeful Look Ahead – Realtor.com
• Mortgage Rates in the US Tick Down, Sending 30-Year to 6.39% – Bloomberg   
• House Price Battle Royale: Low Inventory vs Affordability – Calculated Risk
• Home Prices Fell in Third of the U.S. During First Quarter. Prices drop in more parts of the U.S. than they have in over a decade – Wall Street Journal
• Mortgage Activity Increases Despite Affordability Issues – NAHB
• The Home Buyer’s Quandary: Nobody’s Selling. Many are ready to move but don’t want to lose the low-rate mortgages they locked in a few years ago, crimping the supply of homes and keeping prices high – Wall Street Journal

On the US—other developments:    

• Constraints on City and Neighborhood Growth: The Central Role of Housing Supply – Journal of Economic Perspectives
• How the Fed’s rate hikes helped drive up mortgage payments. Mortgage payments rise based on a number of reasons, but a big factor is that the Fed has raised interest rates 10 times since March 2022. – Politico
• Early Look at Local Housing Markets in April. Early Reporting Markets Suggest Sales Down More YoY in April than in March – Calculated Risk
• Record US construction jobs are fueling housing market recovery hopes. Construction employment remains resilient despite a decline in new housing projects – Quartz
• Your Homeowners’ Insurance Bill Is the Canary in the Climate Coal Mine – New York Times
• Lawler: American Homes 4 Rent Net Seller of Single-Family Homes Last Quarter. Rent Growth Slowed but Remained Elevated – Calculated Risk
• How to Make Housing Less Affordable. An Energy rule for manufactured homes will hit low earners. – Wall Street Journal
• Understanding the Effects of U.S. Home Price Shocks on Household Consumption and Output – Philadelphia Fed
• House prices have spiked and well-priced rentals are increasingly hard to come by. How has the dream of an affordable home become so hard to reach? – The Guardian
• 2nd Look at Local Housing Markets in April – Calculated Risk
• Housing and rent prices with Paul Willen – Boston Fed
• Part 1: Current State of the Housing Market; Overview for mid-April – Calculated Risk

On China:

• Why China Doesn’t Have a Property Tax. Local governments are sinking further into debt, but after years of talk, officials have yet to introduce a real estate tax. – New York Times

On other countries:  

• [France] Land-use regulation and housing supply elasticity: evidence from France – IDEAS
• [Ireland] Ireland Weighs Mortgage Relief to Help Ease Pain from Rate Hikes. Varadkar says relief to be considered as part of budget. Finance Minister has warned of mortgage arrears risk – Bloomberg
• [New Zealand] New Zealand house prices drop again but still out of reach for first-time buyers. Increases in interest rates and living costs mean buying a home remains unaffordable for many people – The Guardian
• [Portugal] Golden Visa Felled by Hot Lisbon Property Market It Helped Spark – Bloomberg
• [Singapore] Singapore’s Soaring Rents Are Becoming a Political Problem. Hot housing market adds pressure on ruling party ahead of vote. Young singles shut out of popular subsidized housing program – Bloomberg
• [Spain] Spain Weighs Tighter Golden Visa Rules for Real Estate Investors – Bloomberg
• [United Kingdom] Housebuilders’ shares rally as fears of drop in UK homes prices fade. Biggest developers report improving sales and prices holding steady in spring selling season – FT
• [United Kingdom] UK mortgage approvals beat forecasts to hit five-month high. Figures for March suggest the property market is stabilising after months of volatility – FT 
• [United Kingdom] For housing to be affordable, prices must go down, not up. Here’s how it could happen. Labor’s housing policies risk being as ineffectual as the Coalition’s. The real solutions aren’t complicated – but they need political will – The Guardian
• [United Kingdom] Will 100% Mortgages Revive UK House Prices? Comparisons with 2008 are wide of the mark. But lenders are clearly still keen to write new business. – Bloomberg
• [United Kingdom] British home-buyers, facing higher interest rates, retreat in April – RICS – Reuters

On the US—developments on house prices, rent, permits and mortgage:    

• US Home Price Insights – May 2023 – CoreLogic
• Black Knight Mortgage Monitor: Home Prices Increased in March; Prices Up 1.0% YoY – Calculated Risk
• Asking rents increase through Q1 – Yardi
• US Homeowners Hold Near-Record Equity Even After Price Declines – Bloomberg
• Unaffordable Prices Are Most Common Reason Buyers Can’t Make Purchase – NAHB

On the US—other developments:    

• A Policy Proposal to Increase the Utilization of the Current Housing Stock – Calculated Risk
• Lawler: Invitation Homes Net Seller of Single-Family Properties for Second Straight Quarter. Some Operating Statistics from Large Publicly-Traded Home Builders – Calculated Risk
• Homeownership Rate Remains High Amid Low Supply – Realtor.com
• Why it’s So Hard to Convert Offices into Housing – First American
• The First Step to Solving the Housing Crisis Might Be Simpler Than You Think. America couldn’t conquer unemployment until there was an unemployment rate. So it’s time to start compiling a housing loss rate. – Politico

On other countries:  

• [Australia] Austrian Home Prices Slump for Second Quarter With More to Come. Residential property prices have fallen 2.3% since late 2022. Raiffeisen Bank analysts predict 10% total decline by 2024 – Bloomberg
• [Australia] Renters to get stronger protections in red-hot market – AFR
• [Australia] Rent in Australian capital cities climbs record 11.7% in 12 months. Increase equivalent to $3,200 a year for tenants, with relief ‘unlikely’ in the short term as demand continues to outstrip supply – The Guardian
• [Canada] The effects of transaction taxes on housing markets – VoxEU
• [Sweden] Sweden’s Housing Downturn Deepens, With More Declines Forecast – Bloomberg
• [United Kingdom] UK House Prices Rise for First Time in Eight Months. Nationwide figures add to signs of strength after slump. Economist says any further gains are likely to be small – Bloomberg

Demographia International Housing Affordability looks at housing affordability in 94 major housing markets across Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States. The 2023 report covers the third quarter of 2022. Housing affordability by Demographia is given in the table below.

“Housing affordability in 2022 continued to reflect the huge price increases that occurred during the pandemic demand shock. Some housing affordability improvements have since occurred and more are likely as the demand shock is hopefully replaced by more normal market trends.”

 – (Demographia, 2023)

Hong Kong is the least affordable with a median multiple of 18.8 followed by Sidney, Vancouver, Honolulu, San Jose, Los Angeles, Auckland, Melbourne and Toronto. Pittsburgh, Rochester, Cleveland and St Louis were the most affordable markets.

The report is available here.

A new paper by Albert Saiz (The Global Housing Affordability Crisis: Policy Options and Strategies) looks at potential policy interventions in response to the surge in housing prices and rents that have grown faster than incomes in many parts of the world. It identifies 30 different strategies to deal with the housing affordability crisis.

• Based on the findings, he argues that prior to determining and implementing programs, policymakers must understand the objective function and available policy tools. In general, the greater the tools deployed, better the outcomes;
• Inter-partisan consensus is required at federal and local levels given that land use if allocated for housing would lock it over the next 20 years;
• Given the affordability challenges, for developed and advanced developing countries, housing programs should be focused on the poor. Subsidies are argued to be unproductive due to their general equilibrium impacts which undo their partial equilibrium effects on affordability;
• Local elasticity of housing supply should be an important contextual feature while determining policy response;
• The design of the program should consider incentives, motivations and behavior of different agents such as beneficiaries, real estate agents, other consumers, suppliers etc.

To read more, click here.

On cross-country:

• Spain and Portugal tackle property crisis by embracing public housing. Under-investment means the two countries have the most limited stocks of subsidised homes in western Europe – FT

On the US—developments on house prices, rent, permits and mortgage:    

• Podcast interview: What’s behind the boom in housing prices and rents? Boston Fed economist says the high rents plus high housing costs mean this spike is different – Boston Fed
• Home Prices Grew 4.7 Percent Year over Year in First Quarter – Fannie Mae
• March Housing Starts: Most Multi-family Under Construction Since 1973. Housing Starts Decreased to 1.420 million Annual Rate in March – Calculated Risk
• US housing market stabilizing as single-family homebuilding, permits surge – Reuters

On the US—other developments:    

• What a housing shortage means for the future of work – Globe and Mail
• How Severe Is the Housing Shortage? It Depends on How You Define ‘Shortage’. Counting the homes we have is straightforward, yet counting the number we need is anything but – Wall Street Journal
• Lawler: Early Read on Existing Home Sales in March. 3rd Look at Local Housing Markets in March – Calculated Risk
• 4th Look at Local Housing Markets: California Home Sales down 34% YoY in March; Prices Down 7.0% YoY. Expect NAR to report sales of around 4.51 million SAAR for March – Calculated Risk

On China:

• China March new home prices rise at fastest pace in 21 months – Reuters
• Chinese property prices rise ahead of first-quarter GDP release. New home values climb at fastest pace in 21 months but uneven consumer recovery clouds outlook – FT
• China’s property-market recovery ‘uncertain’ as investment remains weak despite surge in first-quarter home sales. Property development investment dropped 5.8 per cent year on year to 2.6 trillion yuan (US$377.8 billion) in the first quarter. Overall property sales rose 4.1 per cent year on year in the quarter, and new-homes sales shot up 7.1 per cent, according to government data – South China Morning Post

On other countries:  

• [Australia] Australia must realise the best form of rent control is public housing. Increasing private housing supply alone is not an adequate response to the urgent problem of rising rents – The Guardian
• [Australia] Living with density: will Australia’s housing crisis finally change the way its cities work? Experts agree medium – and high-density development in established suburbs is an essential part of making housing more affordable. But the opposition from existing home owners is fierce – The Guardian
• [Australia] Rental crisis: Airbnb and holiday home owners urged to let out properties to long-term renters. Thousands of homes across Australia are listed on short-stay websites but councils’ call to action is ‘piecemeal approach’ to housing crisis, experts say – The Guardian
• [Germany] Secondary Housing Supply – London School of Economics
• [Hong Kong] Boosting Hong Kong’s housing supply must not come at the expense of subdivided flat residents. The government’s proposal to lower the threshold that would trigger the compulsory sale of old buildings would affect a large number of subdivided flat residents. A progressive approach would allow time to find a balance between the need for redevelopment, the property interests of minority owners, and the concerns of tenants – South China Morning Post
• [India] Mortgage Terms Doubling to 60 Years Rattle Indian Homeowners. Some Indian banks adjust mortgage terms as interest rates rise. Nearly five million borrowers see repayments, tenures increase – Bloomberg
• [India] Land Use Deregulation and Housing Supply Under Institutional Frictions – SSRN
• [Taiwan] Taiwan’s Semiconductor Success Is Fueling a Surge in Home Prices. Home prices in Taiwan are rising in tandem with the expansion plans of the world’s most important semiconductor manufacturers. – Bloomberg
• [United Kingdom] The problematic rise of the ‘ultra-marathon’ mortgage. ‘While a longer mortgage term may help first-time buyers get on what they think is a housing ladder, it actually limits their ability to climb it’ – FT
• [United Kingdom] Shift to Cheaper Homes Holds Answer to Diverging UK House Prices. Capital Economics looks at gap between Nationwide and Halifax. Mortgage lenders disagree on whether price are falling – Bloomberg
• [United Kingdom] As More Rate Hikes Loom, What Next for House Prices? Recent UK house price data is mixed. But a rally from here seems unlikely. – Bloomberg

On the US—developments on house prices, rent, permits and mortgage:    

• Accounting for flood risk would lower American house prices by $187bn. Unpriced future damages inflate home values the most in rural, inland regions – The Economist
• Mortgage Activity Increases as Rates Fall for 5th Straight week – NAHB
• Mortgage Rates Just Dropped Again—Is It Enough To Save the Spring Housing Market? – Realtor.com

On the US—other developments:    

• Bloomberg Wealth: A Housing Market That’s Hard to Handicap. Recent financial and economic indicators are making it difficult for investors to understand how to approach real estate. – Bloomberg
• 1st Look at Local Housing Markets in March. Closed Sales: 19th consecutive month with a YoY decline – Calculated Risk
• Zoning Restrictions Spread to New Areas, Making Housing Crisis Worse. Harvard economist Edward Glaeser describes a dangerous trend. But a cross-ideological tide of reform might help reverse it. – Reason
• 2nd Look at Local Housing Markets in March. The Year-over-year Sales Decline in March will likely be similar to February NSA – Calculated Risk
• Current State of the Housing Market; Overview for mid-April – Calculated Risk
• Housing politics divide the suburbs – Axios

On China:

• Chinese Consumers’ Lack of Confidence Is Causing a Rush of Mortgage Prepayments. Worries about future income levels, poor returns on investment push borrowers to repay debt early – Wall Street Journal
• Derisking Real Estate in China’s Hybrid Economy – NBER

On other countries:  

• [Australia] Housing values in some wealthy Australian suburbs have slumped more than a quarter, data reveals. Affluent areas of capital cities ‘lead both the upswing and the downturn’, according to property data expert – The Guardian
• [Canada] How Homeowners Are Tackling Surging Mortgage Rates in Canada. Homeowners with variable-rate loans at some of Canada’s major lenders are seeking ways to navigate much higher borrowing costs.  – Bloomberg 
• [Denmark] Denmark Joins Nordic Peers in Housing Price Rebound. Danish home prices rise first time in 9 months in March. Nordic markets have had some of the steepest slumps in Europe – Bloomberg
• [Japan] Japan’s house price increases moderating – Global Property Guide
• [United Kingdom] UK house prices are now falling – Global Property Guide
• [United Kingdom] UK house prices rise unexpectedly for third month in a row, by 0.8%. Halifax says market has been helped by easing of borrowing costs – The Guardian
• [United Kingdom] More house price drops expected despite signs of market stabilizing. Rics monthly poll shows new buyer inquiries in UK are flat as volume of agreed sales falls further – The Guardian