The Unassuming Economist

On cross-country:

• ECB Says Pandemic Behavioral Shifts May Cushion Housing Market – Bloomberg
• The impact of rising mortgage rates on the euro area housing market – European Central Bank 
• Who escapes the great mortgage reset? Higher interest rates make refinancing an increasingly grim prospect for homeowners and businesses – FT
• Affordable housing attracts institutional investment. The need for affordable homes has never been greater. At the same time, the institutional interest in Australian housing has never been stronger. – Financial Review
• The World Got $41 Trillion Wealthier Last Year. U.S. Households Were Big Gainers. – Wall Street Journal
• Affordable Homes for the Poor Can Boost Collective Well-Being – Insead

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

• Powell Warns of Correction in Once ‘Red-Hot’ Housing Market. Fed chief says US property price-gains were unsustainable. ‘Good thing’ for prices to decelerate, Powell says Wednesday – Bloomberg
• Home prices see biggest drop in 9 years, thanks to higher mortgage rates – NPR  
• U.S. home sales drop for 7th straight month, house price growth cooling – Reuters  
• Climbing Housing Costs Could Prop Up Inflation for a While. Economists say rents will eventually moderate. Question is when? – Wall Street Journal
• Biden Adviser Says Fed Hikes Are Helping to Cool Housing Prices – Bloomberg
• Decline in Single-Family Permits in July 2022 – NAHB
• As Mortgage Rates Top 6%, More Borrowers Choose Adjustable-Rate Loans. Although riskier, this type of mortgages offers buyers chance to make lower payments now, refinance later – Wall Street Journal
• These Are the US Areas Most at Risk of Housing Downturn, According to Attom Report. Counties seen most vulnerable to price declines in ranking. Rising rates are hurting home sales, boosting unaffordability – Bloomberg
• US Housing Starts Rise Unexpectedly Though Building Permits Drop. Pace of new construction rose 12.2% in August to 1.58 million. Permit applications decline to slowest pace since mid-2020 – Bloomberg
• August Housing Starts: Record Number of Housing Units Under Construction. Housing Starts Increased to 1.575 million Annual Rate in August – Calculated Risk

On the US—other developments:    

• America’s Fractured Housing Market. The Pandemic Broke America’s Housing Market in More Ways Than One – Apricitas Economics
• There’s an Unusual Thing Happening in the Housing Market – Bloomberg
• Homeownership for All Is a Dying Dream. The U.S. economy evolved to spread affordable homes to the masses. A Columbia historian describes how it happened, and why the trend has broken down. – New York Times
• Rate-Hike Fears Are Hitting People Where They Live. The Fed could wreak damage on housing markets that were already strained by affordability. Homebuilder confidence is falling sharply. – Bloomberg
• 3rd Look at Local Housing Markets in August. Sales and New Listings Down Sharply Year-over-year – Calculated Risk
• The Long March of the YIMBYs. Slowly, the tide is starting to turn. – Noah Smith
• A New Set of Housing Winners and Losers Is Emerging. Economic inequality this decade will largely be defined by those who bought homes before 2022 and those who didn’t. – Bloomberg
• NAR: Existing-Home Sales Decreased Slightly to 4.80 million SAAR in August – Calculated Risk
• Economic Indicators Continue to Point to Likely Recession in 2023. Housing Expected to Cool Even Further as Mortgage Rates Move Higher – Fannie Mae
• Covid Era Impacts on Working from Home and Housing Market Impacts – Calculated Risk

On China:

• China’s property crisis hasn’t gone away: it is getting worse. Officials may have little choice but to bail out the industry – The Economist
• China’s local government financing vehicles go on land-buying spree. Property purchases seen as bailout for cities and provinces after exodus of private developers – FT
• China’s Housing Market Is Still on Life Support. Without firmer, broader commitment from Beijing, China’s housing woes will continue to spread – Wall Street Journal
• Even State-Backed China Developers at Risk of Surging Default, Citi Says. SOE developers are biggest drivers of this year’s increase. Overall systemic risk is still ‘manageable’ for Chinese banks – Bloomberg
• Housing Wealth and Online Consumer Behavior: Evidence from Xiong’an New Area in China – NBER 
• Chinese buyers snap up luxury homes as ‘hard currency’ in soft property market – Reuters
• China Mortgage Boycotts Grow as Home Buyers Regroup Online. GitHub list shows homebuyers boycotting 342 projects in China. Government has sought to ease crisis with more funds, loans – Bloomberg

On other countries:  

• [Australia] Interest Rates and the Property Market – Reserve Bank of Australia
• [Australia] Australia Property CEOs Give Diverging Outlooks as Rates Rise. Lendlease’s Lombardo sees tailwinds growing for real estate. Dexus CEO sees one of toughest environments of his career – Bloomberg
• [Australia] Houses to be hit harder than flats by price falls, RBA says. Head of domestic markets says rate rises will depress commercial and residential property prices but wider risks appear contained – The Guardian
• [Australia] Australian sprawl: why developing our way to affordable housing could backfire – The Guardian
• [Canada] Housing Prices Grind Lower in Canada, Aiding Fight Against Inflation. Benchmark prices drop 1.6% in August and are 7.4% below peak. Declines won’t change central bank’s approach, BMO says – Bloomberg 
• [Canada] Canada housing starts fall 3% in August as multi-units decline – Reuters
• [Canada] Cool housing market puts a freeze on flipping – The Globe and Mail
• [Ireland] ‘It’s absolutely buzzing’: Dublin house prices rebound. Ireland’s capital city has seen immigration rise and a return to ‘Celtic Tiger’ prices – FT
• [Mexico] Mexico’s sluggish housing market – Global Property Guide
• [Norway] Norway’s housing market losing steam – Global Property Guide
• [Sweden] Swedish Housing Prices Continue Lower as Cost Surge Looms. Apartment prices rose 0.6% in August, while house prices fell. Rising power costs may worsen the slump in home prices – Bloomberg

From Joseph Politano:

“In early 2020, COVID-19 represented arguably the biggest negative shock to the housing market since 2008. With unemployment rising to 14%, millions of people being forced to move back in with friends or family, and a large share of homeowners becoming at risk of foreclosure, the outlook for the housing market appeared grim.

Policymakers, though, are famously good at fighting the last war—remembering how bad the 2008 crisis was, they pulled out all the stops this time. The Federal Reserve started buying billions in Mortgage-Backed Securities, the federal government spun up a mortgage forbearance program for homeowners, cities and states implemented broad eviction moratoriums, and large amounts of money were disbursed in the form of unemployment benefits and stimulus checks to help workers make rent

By 2021, COVID-19 represented arguably the biggest positive shock to the housing market since 2008—making the initial panic about a possible housing market collapse seem almost ridiculous in retrospect. The feared surge in evictions and foreclosures never came to pass. Prices started skyrocketing as America’s preexisting acute housing shortage mixed with cash-flush buyers who suddenly desired much more space for more home-bound lifestyles. A working paper by John Mondragon and Johannes Wieland attributed half of the 30% increase in housing prices from the end of 2019 to the end of 2021 to the pandemic-driven shift to remote work.“

Continue reading here.

From the IMF’s latest report on Norway:

“Further improvements were made to the macroprudential policy framework, but some recommendations remain outstanding, especially with respect to housing (Annex IV). Following the introduction of the consumer credit regulation in 2019 and the establishment of credit registries, the volume of consumer credit declined, and there are now substantially fewer borrowers with very high consumer debt. Temporary relaxation of mortgage lending regulation that facilitated debt restructuring and home-equity withdrawals ended, and support measures to households were rolled back. Staff continues to recommend to permanently preserve tighter mortgage regulation limits for Oslo now that the recovery is sustained and given still high house price growth in the capital (Box 3). As emphasized during pervious consultations, other targeted measures, including easing restrictions on the supply of new housing, altering regulations to boost construction efficiency, and curbing demand through a gradual phasing out of mortgage interest deductibility should also be implemented. In September 2021, Norges Bank was granted decision-making responsibility for setting the countercyclical capital buffer (CCyB), which is set four times a year, and advisory responsibility for the systemic risk buffer, in line with the 2020 FSAP recommendation. Recommendation powers on other tools should also be granted (Annex IV).”

From the IMF’s latest report on Thailand:

Conferences:

• International Conference on Real Estate Development and Management on February 1th to 4^th, 2023 – Ankara University

On cross-country:

• The World’s Hottest Housing Markets Are Facing a Painful Reset. Frothy property markets are poised for double-digit price declines as consumers face mounting financial pressures. – Bloomberg
• A Global Housing Bust Looms – Bloomberg
• Asia Real Estate Prices Cool in Early Sign of Global Slowdown. Countries including New Zealand and China saw declines in the second quarter, even as prices continued to climb in most places around the world. – Bloomberg
• Real estate booms are behind Europe’s productivity divergence – VoxEU

On the US—developments on house prices and rent:    

• If You Want to Know Where US Inflation Is Heading, Look at Rents. Housing costs play big role in measures of underlying prices. Rent may be close to topping out, but won’t cool any time soon – Bloomberg
• How the ‘Rise of the Rest’ Became the ‘Rise of the Rents’. The pandemic helped spread the sky-high housing prices of coastal hubs to other cities across the US. Here’s why it happened. – Bloomberg
• San Francisco Home Prices Slide in Stark Turn for Costly City. Brokerages show values falling 7% in the past year as higher mortgage rates and work-from-home issues crush demand. – Bloomberg 
• Paul Krugman: Apartment rents peaking? More important than people may realize for economic policy, because rents — market rents and imputed rents on owner-occupied housing — are key drivers of all measures of core inflation 1/ – Twitter

On the US—other developments:    

• Housing market to see ‘significant amount of weakness ahead,’ Goldman says – Yahoo Finance
• The Fed Is Driving an Unusual Contradiction in the Housing Market – Barron’s
• Current State of the Housing Market – Calculated Risk
• 2nd Look at Local Housing Markets in August. Sales and New Listings Down Sharply Year-over-year – Calculated Risk
• Housing inflation is dead. But high housing prices live on – FT
• 1st Look at Local Housing Markets in August. Sales and New Listings Down Sharpy Year-over-year – Calculated Risk
• How Not to Blow Up the Housing Market – American Action Forum
• Median Price of a New Age-Restricted Home Up to $472,000 – NAHB
• Housing Slowdown Puts Damper on Rent-Backed Bonds. Sales of single-family rental-backed bonds to decelerate. Strong rental market is still a positive for the sector – Bloomberg
• Mortgage Equity Withdrawal Still Strong in Q2. Homeowners now relying on Home Equity lines to extract equity – Calculated Risk
• Will the Fed really sell its mortgage bonds next year? Predictability and principles should win – FT
• U.S. Bancorp expects mortgages to be down 30%-35% in Q3 vs Q2 – Reuters
• Real Estate Listings With Flood Scores Shift Home-Shopper Habits. Redfin users who were shown home flood scores went on to view lower-risk properties, an experiment by the company found. – Bloomberg
• Regional Bank Heads See More Signs of Mortgage-Business Strain on Rates. U.S. Bancorp sees mortgage revenue falling as much as 35%. JPMorgan, Wells Fargo are cutting back their mortgage staffs – Bloomberg
• These Housing Markets Are Most at Risk of a Downturn, According to a New Report – Barron’s
• Q2 Update: Delinquencies, Foreclosures and REO. REO: lender Real Estate Owned – Calculated Risk
• U.S. mortgage interest rates top 6% for first time since 2008 – Reuters

On China:

• China Rolls Out Property Policies Across Nation to Fix Slump. At least 70 policies have been issued across cities in China. Cities are optimizing policies based on their own situation – Bloomberg
• Chinese Banks Lose a Mortgage Safety Net as Developers Slide Into Distress. Real-estate firms have written at least $300 billion in mortgage guarantees on uncompleted homes that they presold – Wall Street Journal
• Evergrande vows to restart all stalled property projects. Heavily indebted Chinese developer’s Hong Kong headquarters was seized last week – FT
• China’s ponzi-like property market is eroding faith in the state. Its meltdown could scarcely come at a worse time for Xi Jinping – The Economist  
• Evergrande Vows to Resume Projects to Allay Boycott Concerns. Debt-laden developer to restart remaining 38 stalled projects. Unfinished homes have led buyers to boycott mortgages in China – Bloomberg
• Chinese Rush to Repay Mortgages Gains Momentum in Abrupt U-Turn. People are cashing in investment products to pay off mortgages as economic uncertainty and Covid-19 outbreaks cause them to rethink their finances. – Bloomberg

On other countries:  

• [Australia] ‘A necessity’: housing prices force more Australians into share homes in midlife. The share-house demographic is skewing older. More people are renting and sharing – and they’re doing it longer – The Guardian
• [Australia] Rent is skyrocketing in Australia. Is Airbnb responsible for driving up prices? Experts say many factors are responsible for rising costs, and growth in short-term rentals may not be the main culprit – The Guardian
• [Australia] High-density development and better rent assistance key to addressing Australia’s housing crisis, economist says. Brendan Coates warns person’s future wealth is increasingly driven by ‘who their parents were rather than their talent’ – The Guardian
• [Finland] Finland’s housing market remains stable – Global Property Guide
• [Hong Kong] Recent Hong Kong homebuyers stand to lose millions as prices decline – some already have. Many people who bought homes over the past five years are now facing a loss – at least on paper – as prices continue to slide. Some owners who had to sell have taken significant losses – in one case to the tune of HK$5.85 million (US$745,334) – South China Morning Post
• [Ireland] Irish house price growth slows to 13% year-on-year in July – Reuters
• [New Zealand] House prices continue to slide from last year’s peak – RNZ
• [Singapore] Singapore’s modest house price growth – Global Property Guide
• [Singapore] Singapore Property Is Unaffordable, Six Out of 10 People Say. City-state’s real estate market defies gravity, fueling angst. Rising rates are having a limited impact on market: analyst – Bloomberg
• [South Korea] Korea’s Housing Market Falls Most Since Global Financial Crisis – Bloomberg
• [Sweden] Sweden’s Big Short Signals Trouble for European Real Estate. SBB is second-most shorted stock in Europe on debt concerns. Falling property values, refinancing woes pose downgrade risk – Bloomberg 
• [United Kingdom] The great British housing wealth divide. The over-65s hold 47 per cent of housing equity and 7.4mn ‘extra’ bedrooms. Could the cost of living crisis change things? – FT  
• [United Kingdom] Builders and estate agents braced for UK housing downturn. Protracted drop in activity and prices likely because of high inflation and low consumer confidence – FT
• [United Kingdom] Higher rents and utility bills pushing people into smaller homes, says Zoopla. Trend for cheaper flats and houses comes with increase in cost of living pressures – FT
• [United Kingdom] UK Consumer Confidence Drop Feeds Concern About House Prices. YouGov survey shows first negative reading since 2020 lockdown. Outlook for house prices plummets with rising mortgage rates – Bloomberg