The Unassuming Economist

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

• A problem for the housing market: People won’t quit their cheap mortgages. Fewer homes are available because homeowners are hanging onto coveted rates of 3 or 4 percent – Washington Post
• The Great Pandemic Mortgage Refinance Boom – New York Fed
• First-Time Buyers Did Not Drive Strong House Price Appreciation in 2021 – New York Fed
• Year-over-Year Decline for Single-Family Permits in March 2023 – NAHB
• US Housing Starts Rise in Sign Home Construction Is Stabilizing. Beginning construction rose 2.2% in April to 1.4 million rate. Gain in one-family homebuilding due to surge in West region – Bloomberg

On the US—other developments:    

• US cities must beware the ‘donut effect’. Many of America’s urban centres are struggling to lure workers back post-pandemic, but the suburbs are thriving – FT
• Central Bank Communication and House Price Expectations – NBER
• Income Gains and the Geography of the US Home Ownership Boom, 1940 to 1960 – NBER
• A debt ceiling default would send the U.S. housing market back into a deep freeze. A debt default is very unlikely, but new scenario projections from Zillow show sales would decrease sharply as mortgage costs balloon – Zillow
• Part 2: Current State of the Housing Market; Overview for mid-April – Calculated Risk
• The US city where ‘desert palaces’ are sprouting as affordable homes dwindle – The Guardian
• The Fed Hiked Rates and Housing Is as Broken as Ever. The weird housing market gets weirder. – Bloomberg
• 3rd Look at Local Housing Markets in April – Calculated Risk
• Coastal Cities Priced Out Low-Wage Workers. Now College Graduates Are Leaving, Too. – New York Times
• Economists Hate Rent Control. Here’s Why They’re Wrong. Half of Americans, namely homeowners, already have rent control. It’s time to expand it to everyone. – The American Prospect
• Lawler: Early Read on Existing Home Sales in April. Distribution of Interest Rates on First-Liens Mortgages Outstanding – Calculated Risk
• April Housing Starts: Near Record Multi-Family Under Construction. Housing Starts at 1.401 million Annual Rate in April – Calculated Risk
• 4th Look at Local Markets in April. Expect the NAR to Report Sales of around 4.33 million for April – Calculated Risk
• Seven of 10 Riskiest US Climate Locations Are Appreciating Faster than National Rate. Exploring climate change risks on the housing market with CoreLogic Climate Risk Analytics as a guide – CoreLogic
• NAHB Debuts New Index for Multifamily Activity – NAHB
• NAR: Existing-Home Sales Decreased to 4.28 million SAAR in April; Median Prices Declined 1.7% YoY. Record Low for Not Seasonally Adjusted Sales in April – Calculated Risk

On China:

• China Housing Rebound Fizzling Shows Risks to Economic Recovery. High-frequency data suggests a short-lived housing recovery. Waning property recovery may limit China’s growth this year – Bloomberg
•  China’s Home-Price Growth Slows as Housing Rebound Fizzles. Prices of new homes rose 0.32% in April, slowing from 0.44%. Adds to signs that the property recovery is weakening – Bloomberg
• China’s developers keep their investment powder dry even as home sales improved in the first 4 months of 2023 – South China Morning Post

On other countries:  

• [Australia] Going halves: are shared equity schemes the answer in Australia’s pricey property market? – The Guardian
• [Australia] The great divide: even if millennials could afford a home, there aren’t enough to buy. The affordability gulf between Australia’s generations is due to demographic luck and policy decisions. But the crux of the problem is supply – The Guardian
• [Austria] Vienna Becomes Epicenter of Europe’s Housing Woes. Bloomberg’s housing tracker shows the Austrian capital is showing some of the steepest declines in Europe – Bloomberg
• [Canada] Canada housing market upturn could delay shift to BoC rate cuts – Reuters
• [Korea] S. Korean house prices fall in April for 11th straight month – Reuters
• [Turkey] Istanbul Gets Caught Between Housing Crunch and Earthquake Risk. Soaring housing prices and political squabbling in Turkey’s largest city are hampering efforts to rebuild unstable homes. – Bloomberg
• [United Kingdom] Renters’ reform must close loopholes for unfair evictions, campaigners say. Experts warn Michael Gove lack of detail would allow landlords to circumvent legal overhaul – The Guardian

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