This is Nuts. When's the Crash? Philippine Home Prices Have Gone Parabolic!

Philippine Home Prices have gone parabolic. Home prices are now 116.03% above their inflation-adjusted basis.

On a year-over-year basis, home prices have increased almost 19% since the first quarter  of 2018. Since the third quarter of 2016, home prices have climbed 38%. This pace is unsustainable and will not last.

New Zealand Real Estate Market: Is it a Unicorn? Prices Keep Rising While Other Markets Fall

House Prices in New Zealand continue to rise. In the first quarter of 2019, it rose 3.5% year-over-year.

This is in sharp contrast to its next door neighbor, Australia, where house prices in the first quarter of 2019 have dropped 7.7% year-over-year and are down 8.27% from their peak in the fourth quarter of 2017.

In real terms, New Zealand's uptrend in home prices seems to have accelerated and verges on the parabolic, vastly outpacing real disposable income.

The ratio of real house prices to real disposable income seems to have reached a permanently high plateau. The ratio is now 2.29 standard deviations from the mean of 76.82%, implying a probability of only 1.10% that the ratio will go even higher. In other words, it's firmly in bubble territory and seems to be staying there.

Is Trump's Immigration Crackdown Finally Starting to Work?

I know one data point does not make a trend but it's starting to look like foreign born workers are starting lose out in a Trump economy. The proportion of employed foreign workers has been dropping for five months straight since they peaked in February 2019.

US Real Estate Market: This is a Slowdown and Not a Crash

US Home Sales Volumes (both New and Existing Homes) are down 3.82% since their peak in 2016 even as their median sales price reaches new highs.

This trend is borne out by the market for existing homes where prices are still going up as volumes dip, indicating fewer and fewer people can afford the higher home prices.

The opposite trend is true in the market for new homes. Volumes are up while prices are down a mere 2.60% from their peak in 2018.

But since the market for existing homes is almost eight times the size of the new homes market, the existing homes market trend is the dominant one.

Are we in for another housing crash. In a word, no. Not yet. This is just a slowdown and not a crash.

How Far Does the Canadian Housing Market Have to Fall to Reach Equilibrium?

In 2017, the Canadian Housing Market peaked in the second quarter of 2017. Since then, prices have declined modestly, by just 5.28% as of the first quarter of 2019. So, the housing market has slowed down and not quite reached correction levels of a 10% decline.

House prices could still fall by 28.00% to align themselves with the growth in personal disposable incomes. In terms of the ratio of real house prices to real personal disposable incomes, house prices have fallen even more: 7.70% from Q2 of 2017 to Q1 of 2019. The  ratio is now almost within two standard deviations from the historical mean. In other words, they less extremely overvalued and are just starting to enter merely overvalued territory. The probability of house prices being any higher is now only 1.35% instead of 1.30% the last time we looked. The improvement is infinitesimally small.

 If the ratio does revert to the mean, house prices could fall by 31.56%. 


How low can Canadian Property Prices Go?

How Overheated are the Real Estate Markets of Canada, Australia, and New Zealand? 

It's Official: Economic Recovery in the Great Depression is Faster than the Great Recession's

The economic recovery of the Great Recession has been almost imperceptible to most Americans. On a per capita bais, real GDP per Capita grew by 11.55% in the past twelve years - or roughly a compounded annual average growth rate of only 0.91% per annum. This is far less than the so-called "Hindu Rate of Growth" threshold of 1.30% per annum.  This growth rate is so slow that it is almost imperceptible.

In 2019, something extraordinary happened. Those who survived the Great Depression in 1941 (twelve years after the onset of the Great Depression) will be substantially better of than the survivors of the Great Recession in 2019. Real GDP Per Capita for Great Recession survivors would have grown by another anemic 0.91% per annum in 2019. But for survivors of the Great Depression era, their incomes per capita would have grown by an astounding 15.95% in just one year. Moreover, that trend will only accelerate in the next two years. By 1943, Great Depression survivors will be almost 34.48%  richer than they were in 1941.

Can we expect the same for survivors of the Great Recession in the next two years? It's possible but not probable.

When Does the Overheated Real Estate Market of Australia Reach Equilibrium?

Last year, the real estate bust hit Australia. Prices have declined 8.27% since they peaked in the last quarter of 2017. But the decline is still a shade below a 10% correction and has not yet reached bear market proportions of a decline of 20% or more.

House prices could still fall by 38.56% to reach their inflation-adjusted levels. In relation to incomes, the ratio of real house prices to real personal disposable incomes have fallen significantly. That ratio is now within two standard deviations from the historical mean. In other words, they are now just overvalued and not extremely overvalued.  The probability of house prices being any higher is now a healthier 5.22% instead of 1.4% the last time we looked.

If the ratio does revert to the mean, house prices could still fall by 30.67% in real terms. 

How low can Australian Property Prices Go? Let Me Count the Ways  

How Overheated are the Real Estate Markets of Canada, Australia, and New Zealand?