Showing posts with label Global Housing Watch. Show all posts
Friday, December 9, 2022
From the IMF’s latest report on Canada:
“The sharp increase in Canadian house prices, particularly during the pandemic, naturally raises the question of whether an asset price bubble was forming, or whether fundamentals explained most or all of the price run-up. Extending the analysis in Andrle and Plašil (2019), standard mortgage affordability formulas were used to link interest rates, income growth, and other household fundamentals to so-called “attainable” house prices in eleven Census Metropolitan Areas (CMAs) across Canada.
Staff analysis shows that in most locations—with the notable exceptions of Toronto and Hamilton—the change in house prices through the first half of 2021 was fully explained by households’ expanded borrowing capacity (which was driven by historically low mortgage rates and growing income). From mid-2021 onward, however, the growth in house prices in most CMAs exceeded the growth in attainable prices, suggesting some frothiness.
Even the apparent frothiness of the past eighteen months, however, is explainable if one considers
the perspective of investors. For investors, low interest rates, the expectation of economic recovery, and
broadly unchanged long-term growth expectations made prospective real estate cash flows more valuable than for the average owner-occupier. The “r-g” differential returned to its 2019 lows, and in most CMAs, the investor-implied valuation of the median house exceeded observed prices. In other words, buying real estate even at prices the median owner-occupier could not afford would still be consistent with achieving the required return on investment.
Looking forward, the projected rise in interest rates from their lows could drag attainable prices
down over 20 percent from their peak. And should regional overvaluations shrink at the same time, the
drop in actual prices could be substantially higher than this.”
From the IMF’s latest report on Canada:
“The sharp increase in Canadian house prices, particularly during the pandemic, naturally raises the question of whether an asset price bubble was forming, or whether fundamentals explained most or all of the price run-up. Extending the analysis in Andrle and Plašil (2019), standard mortgage affordability formulas were used to link interest rates, income growth, and other household fundamentals to so-called “attainable” house prices in eleven Census Metropolitan Areas (CMAs) across Canada.
Posted by 6:02 AM
atLabels: Global Housing Watch
On cross-country:
On the US—developments on house prices, rent, permits and mortgage:
On the US—other developments:
On other countries:
On cross-country:
On the US—developments on house prices,
Posted by 5:00 AM
atLabels: Global Housing Watch
Friday, November 25, 2022
On cross-country:
On the US—developments on house prices, rent, permits and mortgage:
On the US—other developments:
On China:
On other countries:
On cross-country:
On the US—developments on house prices, rent, permits and mortgage:
Posted by 5:00 AM
atLabels: Global Housing Watch
Friday, November 18, 2022
On cross-country:
On the US—developments on house prices, rent, permits and mortgage:
On the US—other developments:
On China:
On other countries:
On cross-country:
On the US—developments on house prices,
Posted by 5:00 AM
atLabels: Global Housing Watch
Monday, November 14, 2022
From Adam Tooze:
“In this precarious moment – in the fourth quarter of 2022, two years into the recovery from COVID – of all the forces driving towards an abrupt and disruptive global slowdown, by far the largest is the threat of a global housing shock.
There was some anxiety even before 2020 about escalating house prices in hot spots around the world, but the pandemic delivered an unprecedented jolt to housing markets. In 2020 and 2021 house prices surged, causing the IMF to sound the alarm in its October 2021 Financial Stability Report.
In the second half of 2021 inflation accelerated due to supply shocks and in 2022 that surge broadened. With interest rates being pushed up with unprecedented speed, the question now is whether after the unprecedented shutdowns of 2020 and the rapid rebound of 2021, the winter of 2022-3 will see the beginning of a global housing crash. If this were to occur, the impact would be huge.
In the global economy there are three really large asset classes: the equities issued by corporations ($109 trillion); the debt securities issued by corporations and governments ($123 trillion); and real estate, which is dominated by residential real estate, valued worldwide at $258 trillion. Commercial real estate ($32.6 trillion) and agricultural land add another $68 trillion. If economic news were reported more sensibly, indices of global real estate would figure every day alongside the S&P500 and the Nasdaq. The surge in global house prices in 2019-2021 added tens of trillions to measured global wealth. If that unwinds it will deliver a huge recessionary shock.”
Continue reading here.
From Adam Tooze:
“In this precarious moment – in the fourth quarter of 2022, two years into the recovery from COVID – of all the forces driving towards an abrupt and disruptive global slowdown, by far the largest is the threat of a global housing shock.
There was some anxiety even before 2020 about escalating house prices in hot spots around the world, but the pandemic delivered an unprecedented jolt to housing markets.
Posted by 5:33 AM
atLabels: Global Housing Watch
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