Tema: PPCC-Pisitófilos Creditófagos-Otoño 2022

[uno]

La cifra de negocios inmobiliarios se dobla en Málaga en nueve años

De las 35.000 firmas que ha ganado desde 2013, el peor año de la anterior crisis, 6.500 son de este segmento - La provincia tiene ya más de 13.000 inmobiliarias, cifra casi idéntica a la de 2008, según el INE - Málaga, tercera que más empresas crea tras Madrid y Barcelona

https://www.laopiniondemalaga.es/malaga/2022/12/19/cifra-negocios-inmobiliarios-dobla-malaga-80132718.html
19·12·22

De hecho, desde 2013, año en que se comenzó a superar lo más duro de la anterior crisis económica, se han abierto en la provincia unos 6.500 nuevos negocios dedicados a esta actividad, lo que representa cerca del 20% de las más de 35.000 firmas que se han añadido al censo empresarial de Málaga incluyendo todos los sectores.

........................

Las cifras de los últimos años sitúa a las inmobiliarias como la modalidad de negocio que más aperturas acumula en la provincia, pero las primeras posiciones del ranking del DIRCE también tienen a otros representantes del sector constructor. Así, la rama de construcción de edificios suma 2.785 aperturas en Málaga (571 en el último año) para un total de 11.954 negocios, mientras que las actividades de construcción especializada 1.581 (238 de ellas el pasado ejercicio), con lo que llega a las 6.506 empresas.

......................

(para cerrar el artículo)
Los portales inmobiliarios Idealista, Fotocasa y Pisos.com prevén, eso sí, una caída de las compraventas en los próximos trimestres, cuando empiece a reflejarse en los datos la subida de los tipos de interés por parte del Banco Central Europeo (BCE).

Los precios de la vivienda ya empiezan a expulsar al comprador local de muchos barrios de Málaga

El OMAU advierte de que en zonas como Huelin o El Limonar también se está moviendo población ante las dificultades de acceso a una casa y la competencia del cliente inversor, que paga al contado - Los precios han subido un 14,9% en la provincia y un 11% en la capital, superando en muchos municipios los niveles de 2008

https://www.laopiniondemalaga.es/malaga/2022/12/20/precios-vivienda-empiezan-expulsar-comprador-malaga-80210692.html

El PSOE advierte de que "o actuamos ya con la vivienda o no habrá futuro para Málaga"

El portavoz socialista en el Ayuntamiento de la capital, Daniel Pérez, afirma que el último informe del OMAU confirma la tesis de su
partido sobre el “éxodo de 5000 malagueños al año de los barrios" - "Ninguna familia con un sueldo medio puede pagar 300.000 euros por una vivienda ni precios desorbitados del alquiler por la falta de VPO”

https://www.laopiniondemalaga.es/malaga/2022/12/20/psoe-advierte-o-actuamos-vivienda-80218614.html

[Derby]

Al hilo de los últimos comentarios: el efecto de las subidas de tipos tarda hasta 6 meses en causar efecto en la economía.

https://www.ft.com/content/52987c8a-4a09-4cf3-a11e-154ce16b3751

“Downshift” or speed trap?

Goldman Sachs says the Fed might speed up its rate hikes next year

The Federal Reserve’s recent downshift to 50-basis-point rate increases may just be an economic speed trap, says Goldman Sachs. Of course, that’s assuming people need to lose their jobs for the Fed to succeed.

There’s a chance the central bank will pick up the pace again next year after the initial shock of this year’s policy tightening wears off, according to a recent note from economist Joseph Briggs (who before this spent a few years working for the Fed Board of Governors).

To make this case, Briggs looks at exactly how interest rates affect the economy.

Instead of working with “long and variable lags”, as Milton Friedman famously said, GS’s economists argue that higher rates have the largest effect on growth merely 6 months after the Fed raises rates.



They also argue that they aren’t actually contradicting Friedman, and cite comments that say he preferred to measure the level of gross domestic product, not its growth. (We should mention that once the level of gross domestic product stops falling and starts rising, by definition, the economy is starting to grow again. ¯\_(ツ)_/¯)

Anyway, we will leave it to our readers to debate whether the bank’s economists are true Friedmanites or are debasing the monetarist’s legacy.

What’s most important, in their view, is how tighter Fed policy affects financial conditions measured Treasury yields, equity valuations, currency strength, corporate borrowing costs, etc.

And while the Fed raised interest rates again in December, financial conditions have already started to loosen from their tightest levels last month.



That’s mainly because investors think the Fed will continue to slow its rate hikes. The fed funds rate is around 4.3 per cent today, and most estimates call for rates to peak around 5 to 5.25 per cent. Stocks have rebounded a bit from their October lows, and Treasury yields/borrowing costs have retreated from early-November highs.

But Briggs writes that there’s a risk that the Fed will need to ratchet up the pressure again in 2023, because the real “lags” in the effects of Fed policy are felt in labour markets.



We should unpack the focus on job markets a bit, because that’s where this note gets its bite. The Fed is raising rates to control inflation, not to kick people out of work.

Check out the PCE entry in the chart above. That presumably references personal consumption expenditures, or BEA data that tracks changes in consumption. The prices for those goods and services are measured by PCE price index, which is the Fed’s preferred measure of inflation. The chart shows that PCE usually responds most to rate increases within three to six months.

Instead of including PCE price inflation in the chart above (assuming we didn’t misunderstand the labelling), Briggs addresses it with the chart below.



Here’s his explanation of the chart from the note, with our emphasis:

Although 50% of the cumulative effect of a US FCI shock on the level of GDP is realised within 2 quarters, the impact on other indicators generally takes longer. Specifically, we estimate that it takes 2-3 quarters for half of the impact on the jobs-workers gap to be realised, 3-4 quarters for wage growth, and a significant additional lag for wage-driven moves in inflation.

So he’s comparing the timing of a cumulative change in GDP to . . . changes in year-over-year rates of change (inflation and wage growth)? This Alphaville correspondent doesn’t have an economics PhD and doesn’t particularly want a headache, so we will rely on our readers to tell us if that’s reasonable.

Broadly, Briggs’ argument fits with a growing consensus: over the past two decades, the Fed has fought inflation primarily by raising rates until people lose their jobs. That almost always comes with a recession, but the bank’s house view is that there is only a 35-per-cent chance of recession in 2023.

If causing a recession is the only way to fight inflation, the central bank may in fact need to keep raising rates next year.

But this inflation has occurred in the wake of a pandemic and war, which both created massive supply shocks in important sectors like food and energy. Economists are arguing those sectors have systemic and outsized effects on inflation, as Robin wrote recently.

So barring any other supply shocks — and really, who knows? — 2023 should be a good opportunity to test their theory and see if inflation slows. Otherwise, the Fed might be taking a sledgehammer to the economy in an attempt to fix it.

[Derby]

Más sobre la subida de tipos y la inmensa deuda que hay a todos los niveles..,

https://www.ft.com/content/c3cb8378-cac0-4bb1-be7c-170ca002f9fb

The Fed needs to stop raising rates Bill Gross*

With too much hidden leverage around, the central bank should wait to see if the punch bowl has been sufficiently drained

“Love lift us up where we belong,” rings the theme song from the 1982 film An Officer and a Gentleman. Substitute the “Fed” for “love” and you have the theme of 2022-2023, with the global central bank’s captain, Jay Powell, doing the heavy lifting.

We need to renormalise the cost of money. Most of us would agree to this. But how high is that and for how long? Among economists, Larry Summers suggests as high as 6 per cent for the Federal Reserve’s target funds rate but Jeremy Siegel suggests 3 to 4 per cent is enough. As Fed chair, Powell strongly affirms we will be lifting higher from the current 4.25 to 4.5 per cent target, but warns that the peak in rates and its duration will depend on data in the months ahead.

I suggest several clues to this conundrum. First, aside from the critical focus on US employment, global growth and financial conditions, it is important to analyse what level and pace of real interest rates have historically slowed economic growth in past cycles and led to acceptable inflationary targets.

I emphasise real as opposed to nominal yields because the Fed’s and other central banks’ dream outcome is the infrequently mentioned “r-star” — the “neutral” level of overnight money rates net of inflation that is consistent with stable economic conditions.

This is perhaps too complex for widespread public use and is hard to calculate based on forward assumptions of the consumer price index. The 0 per cent or less rate that we saw in some recent years is also an anomaly given the trillions of dollars created under quantitative easing programmes.

Nonetheless, apart from this period, historical statistics over the last several decades would show that on average, an r-star in the US of 2 per cent would be enough to flatten growth and raise unemployment. And an r-star of 0 per cent or less would be enough to accelerate inflation above central bank targets.

It’s the 2 per cent that forecasters seem to pass over in their analysis. I would argue that with the Fed’s inflation target of 2 per cent and with the targeted current fed funds rate at 4.25 to 4.5 per cent and going higher in February, we are already at the optimum r-star rate and will probably stay there for some time if — and a big if — inflation appears to be approaching acceptable levels, even above 2 per cent.

The danger of overshooting and the need to have a forward-looking monetary policy argue strongly for this. The Fed should now stop raising rates and wait to see if the punch bowl has been sufficiently drained.

Second, however, I think it important to recognise the dangerous levels of debt recently acknowledged by the Bank for International Settlements. “Off-balance sheet dollar debt”, they warned in a December 5 update, “may remain out of sight and out of mind, but only until the next time dollar funding liquidity is squeezed.”

They calculate this hidden “shadow bank” debt may be as high as $65tn, more than 2½ times the size of the entire Treasury market and that most of it is owed to banks. Shades of prior Minksy moments!

Minsky’s famous theory is that stability leads to sudden periods of instability brought on by excessive risk-taking argues for commonsensical caution. See the Ponzi schemes — cryptocurrencies, non-fungible tokens etc — created aplenty by central banks under the cover of Covid.

The economist and journalist Walter Bagehot noted the pain point for savers in the days of old in the UK: “John Bull can stand many things, but he cannot stand 2 per cent!” Could then Mr Bull stand the 0 per cent or less of the past few years?

The lowest global rates in history since 2020 have led to massive misallocations of capital. Much of it is in hidden private equity that ultimately must be repriced sharply lower. It is also reflected in housing prices worldwide that resemble 2005-2008 and pose a risk for lenders much like in the era that preceded the global financial crisis. Having locked in historically low mortgage rates, borrowers should not suffer the same default rates as then, but their ability to access future equity-based loans should be severely limited as home prices decline.

There could be trouble ahead if the 4.25 to 4.5 per cent nominal fed funds rate and 2 per cent r-star go higher. Too much hidden leverage, too much shadow debt behind closed doors. To paraphrase the Persian poet Omar Khayyam, the moving Fed should pause, then after having done so, should move on.

*The writer is a philanthropist, co-founder of Pimco, and author of the 2022 memoir I’m Still Standing, Bond King Bill Gross and the Pimco Express.

[Derby]

https://www.bloomberg.com/news/articles/2022-12-20/economist-who-foresaw-housing-crunch-sees-home-prices-dropping

Economist Who Foresaw Housing Crunch Sees Home Prices Dropping

*Tom Lawler expects prices to fall 8% to 12% in next two years
*Key driver for drop is slowing US household formation

An economist who foresaw the popping of the housing bubble more than 15 years ago expects US home prices to fall between 8% and 12% over the next two years as rising rates cut into pandemic-era demand.

Tom Lawler, a former economist for Fannie Mae, sees demand falling in part because a shrinking number of people are moving out on their own and forming households. That’s in part because during the early part of the pandemic in 2020, many people under the age of 34 moved back in with their parents, or didn’t leave the home they grew up in.

Then in 2021, more younger people moved out on their own, contributing to the creation of about 2 million new households over the 12 months ended in March 2022, Lawler said, based on data in the Census’s Current Population Survey Annual Social and Economic Supplement. Over that period, the share of one-person households rose to the highest since at least 1990 while average household size fell to its lowest, 2.5 people per household. 

But in the coming year, the rate of new household growth could fall in half, Lawler said, because so many people who wanted to move out of their current homes already have. His baseline case is for a mild recession. 

“It’s reasonable that household growth or formation would no longer be goosed by these pandemic trends, and instead we’ll see household growth revert back to general trends in the population,” Lawler said. “And if that’s the case, then the slowdown in housing growth has already begun.” 

Rising Rates

On top of household formation slowing, interest rates have risen dramatically this year, lifting mortgage rates at one point to their highest level in two decades, which increases ownership expenses for most buyers. 

“If a lot of the special factors that you’re talking about fade away, at least partly, then as you had a two-year explosion in prices you could see a period where home prices either stagnate or more likely fall for a couple of years,” Lawler said. 

Another reason to expect home prices to fall next year: new listings of homes, which have recently slowed to a dribble, will eventually pick up again, helping to increase supply. Lawler said that effect will probably be overshadowed by the return to long-run trends in household formation. 

Lawler, who spent 22 years at Fannie Mae, earned a reputation for spotting risk after he foresaw the housing bubble that would go on to cause the 2008-09 financial crisis. The housing bubble may have begun as early as 2002, he has said, after the collapse of the tech-stock bubble led investors to search for alternative assets. 

‘It’s Actually Good’ 

Lawler isn’t alone in expecting lower prices — Mark Zandi, chief economist for Moody’s Analytics, expects a nearly 10% downturn over the next two years from a peak in June. 

But many other economists see less dramatic changes ahead. A survey of economists by Bloomberg Opinion columnist Alexis Leondis found that most are expecting average prices to stay within 5% of today’s levels in 2023. A team at Morgan Stanley team not long ago even predicted an increase in house prices of 3% next year.

Prices have already started dropping nationally. Median prices on existing homes were about $379,100 in October, down 8.4% from a peak of $413,800 in June, according to the National Association of Realtors.     

To the extent that home prices drop, it’s cause for celebration, not moaning, Lawler said. Lower prices will make it easier for first time buyers to purchase, for example. 

“It’s actually good,” Lawler said. “I think it would be good if affordability got better.”

[newclo]

Más sobre la subida de tipos y la inmensa deuda que hay a todos los niveles..,

https://www.ft.com/content/c3cb8378-cac0-4bb1-be7c-170ca002f9fb

The Fed needs to stop raising rates Bill Gross*

With too much hidden leverage around, the central bank should wait to see if the punch bowl has been sufficiently drained

“Love lift us up where we belong,” rings the theme song from the 1982 film An Officer and a Gentleman. Substitute the “Fed” for “love” and you have the theme of 2022-2023, with the global central bank’s captain, Jay Powell, doing the heavy lifting.

We need to renormalise the cost of money. Most of us would agree to this. But how high is that and for how long? Among economists, Larry Summers suggests as high as 6 per cent for the Federal Reserve’s target funds rate but Jeremy Siegel suggests 3 to 4 per cent is enough. As Fed chair, Powell strongly affirms we will be lifting higher from the current 4.25 to 4.5 per cent target, but warns that the peak in rates and its duration will depend on data in the months ahead.

I suggest several clues to this conundrum. First, aside from the critical focus on US employment, global growth and financial conditions, it is important to analyse what level and pace of real interest rates have historically slowed economic growth in past cycles and led to acceptable inflationary targets.

I emphasise real as opposed to nominal yields because the Fed’s and other central banks’ dream outcome is the infrequently mentioned “r-star” — the “neutral” level of overnight money rates net of inflation that is consistent with stable economic conditions.

This is perhaps too complex for widespread public use and is hard to calculate based on forward assumptions of the consumer price index. The 0 per cent or less rate that we saw in some recent years is also an anomaly given the trillions of dollars created under quantitative easing programmes.

Nonetheless, apart from this period, historical statistics over the last several decades would show that on average, an r-star in the US of 2 per cent would be enough to flatten growth and raise unemployment. And an r-star of 0 per cent or less would be enough to accelerate inflation above central bank targets.

It’s the 2 per cent that forecasters seem to pass over in their analysis. I would argue that with the Fed’s inflation target of 2 per cent and with the targeted current fed funds rate at 4.25 to 4.5 per cent and going higher in February, we are already at the optimum r-star rate and will probably stay there for some time if — and a big if — inflation appears to be approaching acceptable levels, even above 2 per cent.

The danger of overshooting and the need to have a forward-looking monetary policy argue strongly for this. The Fed should now stop raising rates and wait to see if the punch bowl has been sufficiently drained.

Second, however, I think it important to recognise the dangerous levels of debt recently acknowledged by the Bank for International Settlements. “Off-balance sheet dollar debt”, they warned in a December 5 update, “may remain out of sight and out of mind, but only until the next time dollar funding liquidity is squeezed.”

They calculate this hidden “shadow bank” debt may be as high as $65tn, more than 2½ times the size of the entire Treasury market and that most of it is owed to banks. Shades of prior Minksy moments!

Minsky’s famous theory is that stability leads to sudden periods of instability brought on by excessive risk-taking argues for commonsensical caution. See the Ponzi schemes — cryptocurrencies, non-fungible tokens etc — created aplenty by central banks under the cover of Covid.

The economist and journalist Walter Bagehot noted the pain point for savers in the days of old in the UK: “John Bull can stand many things, but he cannot stand 2 per cent!” Could then Mr Bull stand the 0 per cent or less of the past few years?

The lowest global rates in history since 2020 have led to massive misallocations of capital. Much of it is in hidden private equity that ultimately must be repriced sharply lower. It is also reflected in housing prices worldwide that resemble 2005-2008 and pose a risk for lenders much like in the era that preceded the global financial crisis. Having locked in historically low mortgage rates, borrowers should not suffer the same default rates as then, but their ability to access future equity-based loans should be severely limited as home prices decline.

There could be trouble ahead if the 4.25 to 4.5 per cent nominal fed funds rate and 2 per cent r-star go higher. Too much hidden leverage, too much shadow debt behind closed doors. To paraphrase the Persian poet Omar Khayyam, the moving Fed should pause, then after having done so, should move on.

*The writer is a philanthropist, co-founder of Pimco, and author of the 2022 memoir I’m Still Standing, Bond King Bill Gross and the Pimco Express.

Puff
Qué locura
Menudos niveles de deuda y apalancamiento

No se ve un aterrizaje suave y menos con Deflación, aunque haya quitas importantes y trampas cambiarias;
más bien pintaría hiperinflación, pero acabaría con toda la credibilidad del sistema ¿quién coño va a volver a pedir prestado sin luego te devuelven papelitos y se ríen de ti a la cara? ¿van a seguir comprando deuda los chinos ahora que el mundo es suyo y financiar a los demás? ¿se puede forzar más el uso de dólares o ni con esas ?
Esto necesita un reset tipo Guerra Gorda... oh ! wait ! yo no he dicho eso !!

[Derby]

Puff
Qué locura
Menudos niveles de deuda y apalancamiento

Y como BSO, el tema de "Oficial y caballero" que cita Bill Gross al principio del artículo 

Love lift us up where we belong
Where the eagles cry, on a mountain high
Love lift us up where we belong
Far from the world below, up where the clear winds blow...

Se refiere a las montañas de deuda 

https://www.youtube.com/watch?v=xoxjziGGcdQ

[newclo]

Por cierto, ¿ se ha hablado de esto ?
Tengo 20 páginas sin leer, otra vez y prefiero correr el riesgo de repetirlo que de ignorarlo:

https://www.abc.es/economia/gran-banca-prepara-dovalue-salvavidas-evitar-quiebras-20221217170320-nt.html

-------
Muy ocurrente la BSO, Derby
When Eagles Crying.... chicken to the kitchen y pobre de los de la piel de toro

[newclo]

Y no entiendo bien el alcance de la medida de Japón, ¿me lo podéis explicar, por favor?

https://zonavalue.com/noticias-bolsa/un-dia-historico-para-la-moneda-de-japon-con-un-aumento-de-mas-del-4-por-su-mayor-aumento-desde-octubre-de-1998-y-la-carrera-mundial-por-la-seguridad-en-los-dias-locos-de-ltcm-la-crisis-de-rusia-et

[senslev]

https://www.elconfidencial.com/mercados/2022-12-20/cotizacion-yen-banco-japon-fluctuacion-bonos-tipos_3543080/

Y no entiendo bien el alcance de la medida de Japón, ¿me lo podéis explicar, por favor?

https://zonavalue.com/noticias-bolsa/un-dia-historico-para-la-moneda-de-japon-con-un-aumento-de-mas-del-4-por-su-mayor-aumento-desde-octubre-de-1998-y-la-carrera-mundial-por-la-seguridad-en-los-dias-locos-de-ltcm-la-crisis-de-rusia-et

[Derby]

[senslev]

https://elpais.com/sociedad/2022-12-20/el-33-de-los-ninos-en-espana-en-riesgo-de-pobreza-le-rompieron-las-gafas-y-no-podiamos-pagar-otras.html

[Derby]

De este titular...



A este otro titular...



https://www.theatlantic.com/newsletters/archive/2022/12/homeownership-real-estate-investment-renting/672511/

The Homeownership Society Was a Mistake

Real estate should be treated as consumption, not investment.

It is a truth universally acknowledged that an American in possession of a good fortune must be in want of a mortgage. I don’t know if you should buy a house. Nor am I inclined to give you personal financial advice. But I do think you should be wary of the mythos that accompanies the American institution of homeownership, and of a political environment that touts its advantages while ignoring its many drawbacks.

Renting is for the young or financially irresponsible—or so they say. Homeownership is a guarantee against a lost job, against rising rents, against a medical emergency. It is a promise to your children that you can pay for college or a wedding or that you can help them one day join you in the vaunted halls of the ownership society. In America, homeownership is not just owning a dwelling and the land it resides on; it is a piggy bank, where the bottom 50 percent of the country (by wealth distribution) stores most of its wealth. And it is not a natural market phenomenon. It is propped up by numerous government interventions, including the 30-year fixed-rate mortgage. America has put a lot of weight on this one institution’s shoulders. Too much.

The consensus that homeownership is preferable to renting obscures quite a few rotten truths: about when homeownership doesn’t work out, about whom it doesn’t work out for, and that its gains for some are predicated on losses for others. Speaking in averages masks the heterogeneity of the homeownership experience. For many people, homeownership is a largely beneficial enterprise, but for others, particularly young, middle-income and low-income families as well as Black people, it can be risky. This critique isn’t new (not even at this magazine); in fact way back in 1945, the sociologist John Dean summed up many of my concerns in this quote from his book Homeownership: Is It Sound?: “For some families some houses represent wise buys, but a culture and real estate industry that give blanket endorsement to ownership fail to indicate which families and which houses.” This is my central critique: At the margin, pushing more people into homeownership actually undermines our ability to improve housing outcomes for all, and crucially, it doesn’t even consistently deliver on ownership’s core promise of providing financial security.

Luck Isn’t an Investment Strategy

As the economist Joe Cortright explained for the website City Observatory: housing is a good investment “if you buy at the right time, buy in the right place, get a fair deal on financing, and aren’t excessively vulnerable to market swings.” This latter point is particularly important. Although higher-income Americans may be able to weather job losses or other financial emergencies without selling their home, many other people don’t have that option. Wealth building through homeownership requires selling at the right time, and research indicates that longer tenures in a home translate to lower returns. But the right time to sell may not line up with the right time for you to move. “Buying low and selling high” when the asset we are talking about is where you live is pretty absurd advice. People want to live near family, near good schools, near parks, or in neighborhoods with the types of amenities they desire, not trade their location like penny stocks.

A home is bound to a specific geographic location, vulnerable to local economic and environmental shocks that could wipe out the value of the land or the structure itself right when you need it. The economic forces that have juiced demand to live in America’s coastal cities are extremely strong, but one of the pandemic’s enduring legacies may be a large-scale shift of many workers to remote environments, thereby reducing the value of living near the business districts of superstar cities. Making bets on real estate is tricky business. During the 1990s, Cleveland’s house prices outpaced both the national average and San Francisco’s. How confident are you that you can predict the ways in which urban geography will shift over your tenancy?

Timing isn’t the only external factor determining whether homeownership “works” for Americans. Paying off a mortgage is a form of “forced savings,” in which people save by paying for shelter rather than consciously putting money aside. According to a report by an economist at the National Association of Realtors looking at the housing market from 2011 to 2021, however, price appreciation accounts for roughly 86 percent of the wealth associated with owning a home. That means almost all of the gains come not from paying down a mortgage (money that you literally put into the home) but from rising price tags outside of any individual homeowner’s control.

This is a key, uncomfortable point: Home values, which purportedly built the middle class, are predicated not on sweat equity or hard work but on luck. Home values are mostly about the value of land, not the structure itself, and the value of the land is largely driven by labor markets. Is someone who bought a home in San Francisco in 1978 smarter or more hardworking than someone trying to do so 50 years later? More important, is this kind of random luck, which compounds over time, the best way to organize society? The obvious answer to both of these questions is no.

And for people for whom homeownership has paid off the most? Those living in cities or suburbs of thriving labor markets? For them, their home’s value is directly tied to the scarcity of housing for other people. This system by its nature pits incumbents against newcomers.

Housing Policy Is Built on a Contradiction

At the core of American housing policy is a secret hiding in plain sight: Homeownership works for some because it cannot work for all. If we want to make housing affordable for everyone, then it needs to be cheap and widely available. And if we want that housing to act as a wealth-building vehicle, home values have to increase significantly over time. How do we ensure that housing is both appreciating in value for homeowners but cheap enough for all would-be homeowners to buy in? We can’t.

What makes this rather obvious conclusion significant is just how common it is for policy makers to espouse both goals simultaneously. For instance, in a statement last year lamenting how “inflation hurts Americans pocketbooks,” President Joe Biden also noted that “home values are up” as a proof point that the economic recovery was well under way. So rising prices are bad, except when it comes to homes.

Policy makers aren’t unaware of the reality that quickly appreciating home prices come at the cost of housing affordability. In fact, they’ve repeatedly picked a side, despite pretending otherwise. The homeowner’s power in American politics is unmatched. Rich people tend to be homeowners and have an outsize voice in politics because they are more likely to vote, donate, and engage in the political process.

In a 2018 survey of a sample of America’s mayors—in which most registered serious concerns about housing affordability—less than 25 percent of respondents agreed with the statement “It would be better if housing prices in my city declined.” Three years later, after skyrocketing housing prices made a long-simmering housing crisis real for even high-income Americans, still just 40 percent of participating mayors “strongly” or “somewhat” agreed with that statement. The authors note that they found “somewhat higher support for this position among mayors of Western cities and more expensive cities.”

Relying on a Single Asset Isn’t Smart

The core benefit that homeownership is meant to offer is financial security. Yet in numerous ways it actually exposes homeowners to more risk. By concentrating wealth in one asset, middle-class homeowners are particularly exposed to regional economic and environmental shocks, like if a large employer decides to relocate or a hurricane devastates downtown. Events outside your control can completely wipe you out. It’s no surprise then that the wealthiest Americans are the least likely to store their wealth in their homes. Certainly, they benefit from owning their homes, but the wealthier the American, the more likely they are to hold their assets in equities and mutual funds. (During the pandemic, this difference made the rich even richer, as the stock market outperformed the housing market.)



Policy makers in favor of pushing more people into homeownership often note that housing wealth is regularly used for socially desirable ends, such as starting a business, retiring, or helping finance higher education. But when I asked Zillow economists how people use their home equity, they painted a different picture. Over the past two years, they found that roughly 22 percent of people tapped into their home equity, and that 70 percent of those people used it for home improvements; 39 percent to pay off debt; 29 percent to pay for a car, a vacation, or another costly item; and just 12 percent for college. None of these decisions are bad, per se, but they don’t jive with common perceptions of how housing wealth is put to use. (Additionally, remodeling with that wealth instead of, say, making more diversified investments actually increases individuals’ exposure to the risks of homeownership.) LendingTree similarly found that home improvement was the top reason for homeowners applying for home-equity loans or lines of credit.

Granted, the past couple of years may have been an aberration; people went crazy for home remodeling during the pandemic. But even pre-pandemic research cuts against common understandings of how homeowners use their equity. In 2011, then University of Chicago economists Atif Mian and Amir Sufi looked at how homeowners responded to rising home values and discovered that newfound equity wasn’t used for further investment or even to pay down expensive credit-card balances but rather largely for home improvement or other consumption. A now-familiar trend emerged in this research as well: Borrowing against home equity is the domain of homeowners in relatively poor financial positions. They found that almost 40 percent of total defaults from 2006 to 2008 were from 1997 homeowners who borrowed aggressively against the rising value of their houses.

People also tend to underrate the hidden costs of owning a home, including property taxes, utilities, maintenance costs, and upkeep. In an interview with UC Berkeley professor Carolina Reid in 2013, a low-income first-time homebuyer explained:

“The three months after we bought the house, we tripled our credit card debt. We were so focused on affording the house, we didn’t think about the moving costs. And things like buying trash cans for the bathroom or curtains. I think I must have gone to Target every day and walked out with $300 worth of stuff.”

Inequality Is Inevitable

Home values do not increase uniformly, which means the gains to homeowners differ by income, by geography, and by race. From 2010 to 2020, 71 percent of the increase in the value of owner-occupied housing accumulated to high-income homeowners. The geographic distribution of housing values may not be predictable, and is sometimes surprising, but it isn’t necessarily random, either. Riskier areas tend to be more affordable areas because the people who can pay to live elsewhere will do so. That means that the riskiest investments, and thus the worst potential outcomes for homeowners, are concentrated among people with less wealth to begin with. These differences are inevitable; that’s precisely why our political  obsession with homeownership as an investment is so misguided.

A single-minded pro-homeownership agenda can lead policy makers to ignore massive potential costs. Last year, for instance, NPR found that the Department of Housing and Urban Development had offloaded foreclosed houses in federally designated flood zones on unsuspecting buyers, many of whom were first-time homeowners. A HUD spokesperson justified the move by explaining that the agency wanted to ensure that “property values” were maintained in these areas, so leaving the homes vacant was therefore unacceptable. More so than selling people a vulnerable asset nearly certain to erode their financial stability?

Racial disparities in housing are well-known but worth stressing. In 2018, the Brookings Institute researchers Andre M. Perry, Jonathan Rothwell, and David Harshbarger compared homes in majority-Black neighborhoods with communities that have very few or no Black residents and found that even when controlling for “similar amenities” (school quality, access to businesses, crime), homes in majority-Black neighborhoods are worth 23 percent less, roughly $48,000 a home on average and $156 billion in cumulative losses.

In his book Know Your Price, Perry explains that majority-Black neighborhoods have higher crime rates, longer commute times, and fewer good public amenities (such as high-scoring schools) and private ones (such as highly rated restaurants). Although these factors, of course, affect price, they explain only about half of the differential between Black and white neighborhoods. The rest, Perry attributes to racism. “Value, by and large, is socially constructed, and much of the way we have created practices to value homes are rooted in racist belief systems,” Perry explained to me.

Better government policy can resolve some racial inequities, but not all. Home value is subjective. Obviously labor-market conditions and public investments play a large role, but so do aesthetics and so do sometimes inarticulable feelings of belonging that cannot be quantified or explained, sometimes even to ourselves. When a prospective buyer walks into a neighborhood and sees several Black neighbors, no amount of government legislation can stop them from consciously or subconsciously lowering their assessment of the neighborhood’s value. These subjective assessments create a Black tax on home-price appreciation: The average 2007 owner who sold in 2018 earned a .9 percent annual return while the average Black seller earned a .4 percent return, according to research by the economist Matthew Kahn.

Even when Black Americans do build wealth through homeownership, downturns in the economy wipe them out. According to the Economic Policy Institute, from 2005 to 2009, a time period covering the foreclosure crisis, Black households saw their median net worth fall by 53 percent, while white households saw just a 17 percent decline. And on the flip side, when the housing market is doing well, Black households tend to benefit less than white ones. The Boston Fed estimated that from January to October 2020, as mortgage rates plummeted, 12 percent of white, 14 percent of Asian, and 9 percent of Hispanic borrowers refinanced their homes—whereas only 6 percent of Black borrowers did, likely because of risk factors such as lower credit scores. The researchers found that the savings from refinancing totaled $5.3 billion in payment reductions a year—of which only 3.7 percent went to Black households.

One final inequality that often flies under the radar is generational inequality. When Americans buy homes under the expectation that values always appreciate, that’s an expectation that someone else will pay that increased price. In 2018, writing for City Observatory, the author and housing expert Daniel Kay Hertz aptly described homeownership as a Ponzi scheme: “It is, in other words, a massive up-front transfer of wealth from younger people to older people, on the implicit promise that when those young people become old, there will be new young people willing to give them even more money. And of course, as prices rise, the only young people able to buy into this ponzi scheme are quite well-to-do themselves.”

Fundamentally, the U.S. needs to shift away from understanding housing as an investment and toward treating it as consumption. No one expects their TV or their car to be a store of value, let alone to appreciate. Instead, Americans recognize that expensive purchases should reflect their particular desires and that the cost should be worth the use they get out of them.

Just as higher-wealth households spread their assets among various equities and mutual funds, so should the government encourage and aid lower- and middle-income households in doing the same. Not only would this shift in emphasis help American families diversify risk, but it would help them avoid many of the unavoidably unequal features of the housing market. As the economist Nela Richardson told Marketplace: “A stock in Apple is the same for everybody.” It doesn’t know whether you are Black or white, rich or poor, and the fortunes of all investors are tied together if the stock market does poorly, meaning highly engaged shareholders will hold companies accountable for poor returns or bad management decisions—a benefit that accrues to all investors.

I should be explicit here: Policy makers should completely abandon trying to preserve or improve property values and instead make their focus a housing market abundant with cheap and diverse housing types able to satisfy the needs of people at every income level and stage of life. As such, people would move between homes as their circumstances necessitate. Housing would stop being scarce and thus its attractiveness as an investment would diminish greatly, for both homeowners and larger entities. The government should encourage and aid low-wealth households to save through diversified index funds as it eliminates the tax benefits that pull people into homeownership regardless of the consequences.

Right now, homeownership is the default option for most people with savings. That’s true in part because of the perceived benefits that I mentioned above but also because we make renting a nightmare in this country. In order for homeownership to be a meaningful choice, tenancy has to be one too. Part of what people are purchasing when they move from being a tenant to an owner-occupant is freedom from landlords.

If we are interested in helping low- and middle-income people live well, we need to fix renting. Some potential policies include increasing oversight of the rental market, providing tenants with a right to counsel in eviction court to reduce predatory filings, advancing rent-stabilization policies, public investment in rental-housing quality, and, most important, building tons of new housing so that power shifts in the rental market from landlords to tenants. Even if nothing changes and America’s love affair with homeownership continues, tens of millions of people will continue renting for the duration of their lives, and almost everyone will rent for at least part of their life. Financial security, reliable and reasonable housing payments, and freedom from exploitation should not be the domain of homeowners.

Let housing be a home; let it provide shelter, access to good jobs, and safe and healthy communities. Just don’t let it be an investment.

Jerusalem Demsas is a staff writer at The Atlantic.

[saturno]

Nueva Miami.

https://elpais.com/espana/madrid/2022-12-20/la-cara-b-del-alquiler-en-madrid-cuatro-familias-latinoamericanas-en-un-sotano-de-40-metros-por-2500-euros-al-mes.html

Es indignante.

[sudden and sharp]

 

[R.G.C.I.M.]

Y como BSO, el tema de "Oficial y caballero" que cita Bill Gross al principio del artículo 

Love lift us up where we belong
Where the eagles cry, on a mountain high
Love lift us up where we belong
Far from the world below, up where the clear winds blow...

Se refiere a las montañas de deuda 

https://www.youtube.com/watch?v=xoxjziGGcdQ

Sorry.
No he podido resistirme.

Peli ochentona mericanada , melosa , nada original y previsible.
Pero en mi corazón forever. La veo siempre que la dan. Y me veo a mi. Tantas cosas casi exactamente iguales!!!
Ay! qué nostalgia en la ENM!

Oficial y camarero, versión cañí.

Perdón. Ya me conocen...


Prosigan.