Government efforts to tackle a glut of vacant housing in China by spurring home lending have triggered a bigger problem: a surge in risky subprime-style loans that is generating alarm. Home buyers in China normally put down a third of the cost of a new property upfront. But a rapid rise in buyers borrowing for their down payments—an echo of the easy credit that cratered the U.S. housing market and sparked the financial crisis—has led authorities to clamp down
It is our mission to rebut any mainstream article that spreads misinformation about gold and/or shows a gross misunderstanding of monetary history. Matt O’Brien argues in the Washington Post that a “gold-backed dollar would have been a much more volatile one” and that “[gold]…has nothing to do with the price of food or housing.“ We show in a few simple charts why Matt O’Brien’s arguments are misguided, misinformed and just plain wrong.
In order to gauge the ‘fair value” of home prices, we typically compare prices to the trend in income. The logic is simple – the more income one earns, the more housing he/she can access. However, prices will occasionally diverge from income, as we are experiencing now and clearly did during the early 2000s. As we have been arguing, home prices are currently overvalued - by our estimates 14% on a national level.
US Home prices rose 5.75% YoY according to Case-Shiller (the fastest rate since July 2014) as it appears the Chinese buyers are migrating south from Canada with Portland, Seattle, and San Francisco reported the highest year-over-year gains among the 20 cities with another month of double digit annual price increases. Home prices continue to climb at more than twice the rate of inflation amid a suply shortage as West Coast propertty markets become "Vancouvered."
With Europe back from Easter break, we are seeing a modest continuation of the dollar strength witnessed every day last week, which in turn is pressuring oil and the commodity complex, and leading to some selling in US equity futures (down 0.2% to 2024) ahead of today's main event which is Janet Yellen's speech as the Economic Club of New York at 12:20pm, an event which judging by risk assets so far is expected to be far more hawkish than dovish: after all the S&P 500 is north of 2,000 for now.
It appears that the Chinese Politburo has also noticed that it finds itself straddled with yet another unsustainable housing bubble, not only in Shenzhen, but also Shanghai, and all other Tier 1 cities and has taken aggressive steps to slow down this exponential surge in prices before it gets even more out of control. As a result, on Friday the local government took the following "sudden" steps to halt the exponential rise in home prices and tighten the local housing market dramatically.
Home prices are rising faster than wages in most of the United States, making homeownership increasingly difficult for average Americans in some of the most populous areas of the country, according to a report released on Thursday. The report found that home price growth exceeded wage growth in nearly two thirds of the nation's housing markets so far this year, with urban centers like San Francisco and New York City among the least affordable.
Dear Donald and Hillary: In around ten months, one of you will wake up as Mr. or Mrs. President. After the fabulous fun of post-inaugural balls, you will walk into the Oval Office on Saturday, January 22 and launch into your first 90 days in office. To make your job just a little more manageable, what we would like to do is take you around the world and review some of the economic realities faced by our global partners. For many of them, those realities are not pretty. And you want this job why?