The Unassuming Economist

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

• U.S. home prices to fall 4.5% in 2023 despite higher rates: Reuters poll – Reuters
• Inflation Adjusted House Prices 3.9% Below Peak. Price-to-rent index is 7.1% below recent peak – Calculated Risk
• Black Knight Mortgage Monitor: Home Prices Declined in January, “on pace to fall below 0% by March/April”. Home Prices Off 5.5% from Peak NSA, Prices up 3.4% Y – Calculated Risk
• 1st Look at Local Housing Markets in February. Closed Sales: 18th consecutive month with a YoY decline – Calculated Risk
• Sorry, Fed, Most US Mortgage Rates Were Locked In During Pandemic Lows – Bloomberg
• Mortgage Activity Increases Despite Mortgage Rate Volatility – NAHB
• House Prices and Rents in the 21st Century – Boston Fed
• Boston Advances Rent-Control Measure as Costs Climb. State must sign off on mayor’s plan to combat surging housing costs – Wall Street Journal

On the US—other developments:    

• In Most US Cities, Homes Still Sell Faster Than Before the Pandemic – Bloomberg
• Black-White Homeownership Gap Widened During Pandemic – Wall Street Journal
• Everything you think you know about homelessness is wrong – Noahpinion
• Yes, There’s a Housing Crisis. No, You Can’t Build Here. A modest redevelopment proposal meets Nimby resistance in my ‘quirky’ suburban Virginia neighborhood. – Wall Street Journal
• Foreign Buyers, Who Nearly Disappeared During Covid, Finally Return to the U.S. Housing Market. Real-estate agents say they’ve seen an acceleration in purchases by overseas buyers amid looser Covid restrictions and political-economic shifts abroad – Wall Street Journal
• Americans Need to Be Richer Than Ever to Buy Their First Home. The pandemic boom has given way to higher mortgage rates and tight inventory, further squeezing entry-level house hunters. – Bloomberg 
• Housing Market Momentum Stalls as Critical Spring Season Approaches. Rising interest rates squeeze affordability, drive mortgage applications to lowest levels in decades – Bloomberg
• Housing Market Momentum Stalls as Critical Spring Season Approaches. Rising interest rates squeeze affordability, drive mortgage applications to lowest levels in decades – Wall Street Journal
• Is Spring the Make-or-Break Moment for 2023’s Housing Market? A Brutally Honest Look Ahead for Buyers, Sellers – Realtor.com
• Pandemic Economics, Housing and Monetary Policy: Part I. The Economic Fireworks have been in Housing! – Calculated Risk
• Single-Family Market Share Continues to Shift from Large Population Centers – NAHB 
• Housing Sentiment Returns to Near-Survey Low Amid Affordability Constraints and Job Security Concerns. Both Homebuyers and Home-Sellers Express Caution About Current Market Conditions – Fannie Mae
• Cost of Constructing a Home in 2022 – NAHB
• Housing Advocates Urge Congress to Enact Tax Policies for New Homebuyers – Reuters  

On China:

• China’s Property Recovery Is Held Back by Hesitant Buyers. Second-hand home viewings have jumped 86% in big cities. Weakening expectations over housing prices remains overhang – Bloomberg
• China to guard against risks among property developers – Premier Li – Reuters
• China to Target ‘Unregulated’ Expansion in Property Market. Premier Li calls for risk prevention in major developers. China sets modest growth target as economic headwinds persist – Bloomberg
• Property Shares Fall After China Targets ‘Unregulated’ Expansion. Premier Li calls for risk prevention in major developers. China sets modest growth target as economic headwinds persist – Bloomberg
• Land Supply and House Prices in China – Applied Economics Letters

On other countries:  

• [Australia] Is the auction market causing a false dawn for property prices? – The Sydney Morning Herald
• [India] India housing market to remain resilient despite higher interest rates: Reuters poll – Reuters
• [Singapore] Will Singapore’s housing supply rise amid rising interest rates, recession fears and tightening wallets? Supply has dropped since 2018, and rental market is expected to remain tight despite about 30,000 potential completions forecast for the next two years. Singapore developers are still grappling with high costs, shortage of labour thanks to the upheavals in supply chains caused by pandemic, analysts note – South China Morning Post
• [Sweden] Sweden Housing Market Takes a Break From Worst Rout in Years. Apartment prices rise for the first time since March 2022. Sales volumes continue to be subdued, Maklarstatistik says – Bloomberg
• [United Kingdom] Falling house prices may seem like a good thing – but it’s renters who are paying the price. With first-time buyers unable to get a mortgage and landlords hiking up rents, it’s a vicious cycle – The Guardian
• [United Kingdom] UK house prices bounce unexpectedly in February: Halifax – Reuters
• [United Kingdom] Are UK House Prices Rebounding Already? The latest Halifax data is much more upbeat than we’ve grown used to in recent months. – Bloomberg
• [United Kingdom] UK house prices slide further but market pessimism eases: RICS – Reuters

From the IMF’s latest report on Netherlands:

“Credit has grown at a robust pace, but the phase out of monetary accommodation has contributed to tighter financial conditions and the cooling of a buoyant housing market. Mortgage lending has expanded at a brisk rate (…), reflecting strong housing demand, yet prices for homes have recently started to decline, falling 2 percent below their July 2022 peak. Echoing the scaling back of monetary accommodation, interest rates for housing and corporate loans have started to rise from historic lows. At the same time, banks have tightened credit standards, primarily on the back of deteriorating risk perceptions due to an uncertain economic outlook.”

(…)

“The cooling of a richly valued housing market calls for ongoing alertness towards emerging strains and readiness to deploy existing buffers if needed. Recently flagging house price momentum accentuates vulnerabilities from a residential real estate sector deemed overvalued on a broad range of measures (…). Household indebtedness, at more than 100 percent of GDP, is among the highest in the euro area while a large part of assets is concentrated in (illiquid) pension and insurance claims (…). With house prices acting as a potential amplifier, this raises the risk of borrower distress in the event of an economic downturn, although the large share of fixed-rate mortgages (more than 90 percent of the total) and long maturities (typically 30 years) provides some comfort. Still, vulnerabilities are heightened by about a quarter of outstanding mortgages facing an interest rate reset in the coming five years, overextended balance sheets of recent home buyers, a prevalence of interest-only mortgages (around two fifths of the total), and debt service to income ratios (DSTIs) becoming more binding for new mortgages due to rising interest rates. In this context, maintaining minimum risk weight floors for mortgage loans (activated in January 2022) until December 1, 2024, is appropriate as it helps stabilize the housing cycle and preserves buffers that should be released to absorb credit losses in the event of a more severe housing market downturn. Likewise, efforts to increase awareness about the risks from interest-only lending among borrowers and lenders are welcome. Structurally, the Dutch housing market remains unbalanced, requiring determined policy intervention. Policy measures should strive to lessen incentives for households to live in highly leveraged, owner-occupied housing. The government’s program to address housing shortages and ensure affordability contain important elements to tackle underlying imbalances but means-testing for social housing eligibility could be strengthened and the need for expansive rent control should be re-evaluated.”

From the IMF’s latest report on Netherlands:

“With the supply of residential dwellings in the Netherlands having failed to live up to demand over the last decade, apprehension among the population about the availability of affordable housing has risen. Particularly spatial, regulatory, planning, environmental and supply chain constraints have kept a lid on construction. Recognizing the socio-economic challenges posed by inadequate housing supply, the government has embarked on an ambitious agenda with promising steps to boost the availability of affordable properties. To strengthen the traction of housing policies to reach its intended goals, a larger role for economic incentives and private sector involvement should be evaluated.”

Matthew A. Killingsworth, Daniel Kahneman, and Barbara Mellers explore the relationship between income and emotional well-being.

“Using dichotomous questions about the preceding day, [Kahneman and Deaton, Proc. Natl. Acad. Sci. U.S.A. 107, 16489–16493 (2010)] reported a flattening pattern: happiness increased steadily with log(income) up to a threshold and then plateaued. Using experience sampling with a continuous scale, [Killingsworth, Proc. Natl. Acad. Sci. U.S.A. 118, e2016976118 (2021)] reported a linear-log pattern in which average happiness rose consistently with log(income).”

Read more here.

On cross-country:

• Threat of global housing slide looms amid rising rates – Dallas Fed
• ‘The risk of a deep housing slide persists’: Dallas Fed says downturn in U.S. and German housing markets could affect the rest of the world – Market Watch  
• How low will house prices go? Lessons from UK, US, Europe and elsewhere – The Guardian

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

• U.S. mortgage interest rates jump to highest level since November – MBA – Reuters
• US to Cut Mortgage Insurance Costs for Some New Homeowners. Program seeks to ease soaring borrowing costs that hurt demand. Vice President Harris to announce the program on Wednesday – Bloomberg
• Mortgage applications plummet as rates jump – Axios  
• That 3% Mortgage Just Keeps Getting Better. As the Fed pushes interest rates higher, homeowners who secured ultra-cheap loans during the pandemic can invest in low-risk Treasuries that earn enough to significantly offset the cost of their homes. – Bloomberg
• Measures of Shelter in the CPI and PCE price indexes Still Increasing – Calculated Risk
• Case-Shiller: National House Price Index “Decline Continued” to 5.8% year-over-year increase in December – Calculated Risk
• Freddie Mac House Price Index Declines for 7th Consecutive Month in January. 37 States and D.C. have seen price declines Seasonally Adjusted – Calculated Risk
• U.S. house price inflation cools further in December – Reuters
• A Tight Labor Market Could Keep Rent Inflation Elevated – Kansas City Fed
• Year-over-year Rent Growth Continues to Decelerate. Expect YoY Rents to Slow Further – Calculated Risk

On the US—other developments:    

• America’s property market suggests recession is on the way. As developers find clever ways to cut mortgage rates, the Fed may fight back – The Economist
• Checking in on the U.S. Housing Market. Activity is normalizing along with rates. Builders’ prudence on hiring during the boomlet is now shielding the job market. – The Overshoot
• Will US Housing Crash The Economy? Maybe it’s different this time. – Bloomberg
• How homebuilders are luring buyers back – Axios
• New Home Sales Increase to 670,000 Annual Rate in January – NAHB
• New Home Sales Up in January but Higher Rates Signal Further Weakness – NAHB
• Lawler: AMH Net Seller of Existing Single-Family Homes, “Investor” Home Purchases Plunged – Calculated Risk
• America’s Housing Market Has Flipped But Not Flopped. A dearth of supply of existing homes is leading to a boom in building, despite sky-high mortgage rates. – Bloomberg
• U.S. pending home sales post largest gain in 2-1/2 years in January – Reuters
• The frozen housing market. And what it means for the economy – FT
• The Age Gap in Mortgage Access – Philadelphia Fed
• Financial Benefits Motivated Homebuying During the Pandemic, More So Than Space or Location Preferences – Fannie Mae
• How Is Digitalization Transforming How People Find and Finance Housing? – Harvard Joint Center for Housing Studies
• Private Residential Spending Falls Slightly in January – NAHB

On other countries:  

• [Germany] Germany home prices to sink nearly 6% this year – Reuters
• [Hong Kong] Hong Kong home prices end seven-month decline with 0.6% rise in January – Reuters
• [United Kingdom] Rising UK Rents Will Cushion Any Drop in House Prices. The cost to society of a dysfunctional housing market, as young aspiring buyers are thwarted while landlords saving for retirement are penalized, is rising. – Bloomberg
• [United Kingdom] UK’s Soaring Mortgage Costs Mean It’s Cheaper to Rent a Home. Capital Economics says average mortgage tops £1,000 a month. Renting probably will become more expensive next year – Bloomberg
• [United Kingdom] England’s new housing supply likely to fall to lowest level in decades, study says. Home Builders Federation warns planning policy changes will result in government meeting less than half its annual target – The Guardian
• [United Kingdom] House building set to slump in England, warns trade body. Number of new properties completed each year could fall to 110,000 says Home Builders Federation – FT  
• [United Kingdom] Three years on: how the pandemic reshaped the UK housing market – Lloyds Banking Group
• [United Kingdom] UK house prices suffer biggest fall in more than a decade as higher interest rates bite. Nationwide figures show a greater than expected 1.1% drop in year to February – FT