The Unassuming Economist

From the IMF’s latest report on Lithuania:

“To address potential risks to the financial sector from rising residential real estate prices, the BoL has implemented a series of macroprudential measures. These include tighter down payment requirements for second and subsequent housing loans and a new sectoral systemic risk buffer for banks with the largest mortgage portfolios. The distribution of loan-to-value ratios on new loans has shifted down since the measure was implemented. The BoL estimates that these measures could reduce new mortgages by 10 percent and slow house price growth by as much as 3 percent. However, the effectiveness of capital-based measures might be limited given excess capital and the profitability of the banking system. Addressing some of the underlying structural bottlenecks in housing supply will help contain real estate prices that, over the last year, appear to have deviated from fundaments in the Vilnius area. This would require a comprehensive approach to regional development and changes in land-use policies to increase allocation to residential housing.

Given higher uncertainty, the emphasis should remain on mitigating potential financial stability risks. While the banking sector remains among the most concentrated in the EU, the degree of concentration across loan segments—and most notably consumer loans—has declined after the third largest bank completed its restructuring. At the same time, interest rates on loans have declined without affecting credit standards. Low interest rates and strong household income are factors driving the boom in the residential real estate market. However, rapidly rising house prices, record sales, buyer intent indicators, and an increase in secondary mortgages may be signs of overheating. Nearly half of real estate transactions do not involve a mortgage, suggesting that an increase in interest rates may have a limited effect on house prices. The expected rapid growth of an online fintech bank focused on non-resident activity and ambitious expansion plans across the EU will require sustained supervisory efforts by national and supranational authorities.”

On cross-country:

• Reuters Q1 polls on major world housing markets – Reuters
• Around the World, Buying Is Costlier Than Renting. A new study compares the costs of renting versus buying a three-bedroom home in 39 countries across the globe. – New York Times
• To build or not to build, that is the uncertainty: Fuzzy synthetic evaluation of risks for sustainable housing in developing economies – Cities

On the US:    

• The Coming Rise in Residential Inflation – NBER
• The Fed’s Housing Dilemma: There Is No Way to Be Neutral – Barron’s
• How Bad Will It Be? Why the Spring Housing Market Will Be ‘Miserable’ for Homebuyers – Realtor
• US Housing Supply Gap Expands in 2021 – Realtor
• To Fix Its Housing Crisis, California Must Unleash the Duplex. State officials should look to New Jersey to see how zoning roles that allow “light touch density” can bring down housing costs — if local leaders allow it. – Bloomberg
• Audit: L.A. Spending as Much as $837,000 per Unit of Housing for Homeless. Despite apportioning over $1 billion for homeless housing, cost overruns and sluggish pacing threaten to jeopardize the city project. – Reason
• Pandemic Mortgage Relief Headed Off Delinquencies, but What Happens Now? – Dallas Fed
• Investors brace for flood of mortgage bonds when Fed trims balance sheet. US central bank is set to unwind massive pandemic-era stimulus measures – FT
• Short-Term Property Rental Platforms and the Housing Market: House Prices and Liquidity – Journal of Housing Research
• U.S. house prices to rise another 10% this year – Reuters

On China

• China urges banks, insurers to support affordable rental housing – Reuters
• A small measure of help for homebuyers. Relaxing mortgage requirements might help some to purchase flats that are larger than a car parking space – South China Morning Post
• Chinese Developers’ Dollar Bond Woes Deepen: Evergrande Update – Bloomberg
• Chinese Property Developers’ Broken Promises Erode Investor Confidence. China’s property-bond market remains deeply distressed as real-estate sales fall and investors retreat on a lack of trust – Wall Street Journal

On other countries:  

• [Germany] German house price rally to slow but cheap money to keep it running – Reuters
• [Ireland] Referendum on housing could be held next year. The Housing Commission has established a referendum subcommittee – The Irish Times
• [United Kingdom] Consumption Effects of Mortgage Payment Holidays: Evidence during the COVID-19 Pandemic – IMF
• [United Kingdom] Rightmove predicts property transactions return to ‘pre-pandemic levels’ this year. Bullish earnings report shows 2021 was busiest in FTSE 100 group’s 21-year history – FT
• [United Kingdom] Builders face an end to era of through-the-roof house prices. Their winning streak is fading before the cost of living crisis, supply and staff woes, and now conflict in Europe – The Guardian
• [United Kingdom] UK house prices surge in February despite rising mortgage rates. Nationwide house price index climbs 12.6%, pushing average cost of home over £260,000 – FT

On Nov. 30, Paul Krugman gave a very lucid exposition of why he was on “Team Transitory”. Will today’s release of the US CPI lead to a change in his position on inflation? Here’s a link to the video of the Nov. 30 webinar.

An update of my previous work on forecasting turning points. While the previous work was on how well economists could predict recessions, this one is on how well they can predict recoveries.

“Our classification implies that [x%] of US jobs can plausibly be performed at home.” What’s your guess for x? Compare your guess to calculations by Dingel and Neiman:

‘I won’t be logging in today. Forgot my password.’.