Tag Archives | housing

US housing starts stumble as rental demand weakens

US housing is core to the US economy.  And as the US economy is 22% of the global economy, developments in housing matter to all of us. We learnt this during the subprime Crisis, when the blog’s warnings that the supposed boom was an illusion were ignored until too late.  Now the same problem is developing again.  Thus […]

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Underwater mortgages temporarily support US house prices

US investors are continuing to excite themselves over the potential for a re-run of the sub-prime housing boom from 2003-7. Thus they welcomed last week’s news of higher house prices with a major rally, after having ignored earlier reports of a slower pace in housing starts themselves. As the chart shows: • Starts dropped back […]

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90% of new US mortgage bonds now government guaranteed

It would be nice to believe that a sustained recovery was now underway in the US housing market. But unfortunately, there is little evidence to confirm the claims now being made. As the chart of prices from the S&P Case-Shiller index shows: • February prices (red square) remain in the same range seen since the […]

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Aging US BabyBoomers mean new home boom unlikely

Is a recovery underway in the US housing market? Investors on Wall Street certainly think so. One over-excited fund manager called the blog recently to exclaim “housing starts were at 500k, now they are at 900k, and they’ll be back to 2 million within a year or two”. His definition of a pessimist was someone […]

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US house prices unlikely to drive economic recovery

When ‘everybody knows’ something, experience has taught the blog to become very suspicious. And when everybody knows that rising US house prices are certain to drive a US economic recovery, it becomes very suspicious: • For a start, as the above chart shows, the prices shown in the authoritative S&P Case-Shiller Index haven’t actually risen […]

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UK housing markets approach their Minsky Moment

The UK housing market has led a charmed life in recent years. Unlike the US, Spain, Ireland and many other Western countries, prices have not collapsed. Instead, near zero interest rates, and the high proportion of mortgages on variable rates, meant that UK homeowners have seen their monthly payments reduce dramatically. There is just one […]

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China increases lending as leadership talks continue

It has been obvious for most of this year that China’s economy is in trouble. As the blog wrote in the Financial Times in March: “PTA is thus warning that China’s economy could be slowing faster than generally realised”. Yet it is hard for the government to move beyond short-term responses: • The new Politburo […]

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US housing stabilises, but Uncertainty remains high

Housing used to be the engine-room of the US economy. Rising prices allowed people to use their house as a cash machine. In turn, this drove GDP growth, as consumer spending is 70% of the US economy. But for the past 5 years, this process has gone into reverse: • Owners now have $9.18tn in […]

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China’s leaders mark time till power handover

How many more empty cities like Ordos does China really need? Are 64.5m empty apartments enough, or should there be more? Should we build more steel mills, to add to the current 220MT of over-capacity? These are the questions facing China’s leadership today, as they debate the economic slowdown. Growth has slowed to a relative […]

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China battles economic slowdown

Wenzhou in coastal Zhejiang province was the first city to encourage private enterprise when China began opening its economy in 1978. Its growth accelerated after China joined the World Trade Organisation in 2001, attracting 2.8 million migrant workers to join the city’s population. Now its 9 million people are at the forefront of China’s slowdown, […]

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