You may have heard about a new housing crisis in the US. The idea is that the supply of houses cannot keep up with demand, which is going to inflate prices and keep young people priced out of owning a first home. Additionally, this inflation gets passed on to the rest of the economy and reflects worries about the US’s economic future. There are certainly problems with the US housing market, but according to Joe LaVorgna, chief US economist at Deutsche Bank, there’s no reason to get too worried just yet. “To be sure, the housing market was expected to be weak in the aftermath of the recession, as households repaired their severely-impaired balance sheets,” wrote LaVorgna in a note to clients. “However, household deleveraging is now complete, mortgage rates are low and banks have been loosening lending standards for residential mortgages. Therefore, an optimistic perspective is that the recent data are an aberration and housing will contribute meaningfully to growth in the remainder of this cycle” Here’s the crux of LaVorgna’s argument: People need access to and appetite for credit to buy a house. The most recent cycle post-recession has seen little of either. In terms of access, as… Read full this story
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Here’s why you shouldn’t worry about the ‘new housing crisis’ have 325 words, post on www.businessinsider.sg at April 21, 2016. This is cached page on NGHONG. If you want remove this page, please contact us.
