Economy

A decade ago, the city — and all of Michigan — had too many houses. Now it has a shortage. The shift there explains today’s costly housing market in the rest of the country.For years, when Michigan politicians talked about the state’s housing problem, they were referring to a surplus: too many run-down houses, stripped of valuable copper, sitting empty and blighting neighborhoods. Now the message has flipped. In her State of the State address this year, Gov. Gretchen Whitmer lamented the housing shortage and landed one of her biggest applause lines with, “The rent is too damn high, and we don’t have enough damn housing. So our response is simple: ‘Build, baby, build!”If you want to know what the housing crisis for middle-income Americans looks like in 2024, spend some time in Michigan. The surplus-to-shortage whipsaw here is a mitten-shaped miniature of what the entire country has gone through.I’ve been writing about housing and the economy for two decades, and have watched as the nation’s housing market has made the journey from boom to bust to deficit, seemingly without pausing for a normal middle. There are lots of reasons this happened, but they center on a big one: the late-2000s housing bust, which the country has never fully recovered from. Or as Ali Wolf, chief economist at Zonda, a data and consulting firm, put it: “The Great Recession broke the U.S. housing market.”At first, rapidly rising housing costs seemed like a regional problem. It made sense that places like San Francisco, which was already expensive, filled with well-paid tech workers and hamstrung by stringent building regulations, would be in crisis. Much of the rest of the country was still affordable, however, so high-cost “superstar cities” were seen as an exception instead of a warning.Now California’s problem is everywhere. Double-income couples with good jobs are priced out of homeownership in Spokane, Wash. Homeless encampments sprawl in Phoenix. The rent is too damn high in Kalamazoo.The housing crisis has moved from blue states to red states, and large metro areas to rural towns. In a time of extreme polarization, the too-high cost of housing and its attendant social problems are among the few things Americans truly share. That and a growing rage about the country’s inability to fix it.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

SEOUL (Reuters) – South Korea’s central bank kept interest rates unchanged for a 13th straight meeting on Thursday, as policymakers prioritised the need to keep stubborn inflation in check even as the case for rate cuts later this year grows.The Bank of Korea held its benchmark interest rate at 3.50% at its monetary policy review, as expected by 38 out of 40 economists surveyed by Reuters.The BOK also downgraded forecasts for both growth and inflation this year.It cut 2024 growth forecast to 2.4% from 2.5% previously, after Asia’s fourth-largest economy unexpectedly contracted in the second quarter. It now sees consumer inflation at 2.5% for this year, slower than 2.6% seen previously.Economists expect the BOK to start cutting interest rates at the bank’s next policy meeting on Oct. 11, around the same time the U.S. Federal Reserve is expected to deliver its first rate cut in four years.The prospects on an October cut come as the BOK’s global peers unwind the aggressive policy tightening of recent years with central banks in Canada, New Zealand and the euro zone having all loosened monetary settings.Rising apartment prices in Seoul took centre stage in policy talks with the government earlier this month announcing plans to increase housing supply to cool surging prices. That’s one reason analysts think the BOK may go slow on rate cuts.Inflation has generally cooled enough to soothe concerns over price pressure but a resurgence in household debt on the back of expectations for interest rate cuts has raised concerns about easing too soon.”Considering that household debt is increasing fast, we expect there to be only one rate cut this year. We think the BOK will remain relatively hawkish,” said Kim Jun-yeong, an analyst at DS Investment & Securities, who sees a cut in the fourth quarter.The focus is on Governor Rhee Chang-yong’s press conference at 0210 GMT, where the names of any dissenters could be announced. Dissenting votes typically lead to policy changes in subsequent months. More

TOKYO (Reuters) – The dollar traded near the lowest in more than a year against the euro and sterling on Thursday as a dovish Federal Reserve and fresh signs of weakness in the U.S. job market backed the case for interest rate cuts.The dollar sagged below the closely watched 145 yen mark as U.S. Treasury yields slid, ahead of weekly jobless claims data later in the day and a hotly anticipated speech by Fed Chair Jerome Powell at the central bank’s annual Jackson Hole symposium on Friday.The dollar index, which measures the currency against the euro, sterling, yen and three other major peers, was little changed at 101.14 as of 0015 GMT. It dipped to 100.92 overnight for the first time this year.The euro was flat at $1.1154 after pushing as high as $1.1130 on Wednesday for the first time since July of last year.Sterling was steady at $1.3092 after climbing to $1.31195 in the previous session, also a level last seen in July of 2023.Fed officials last month were strongly leaning toward an interest rate cut at their September policy meeting and several of them would have even been willing to reduce borrowing costs immediately, according to the minutes of the July 30-31 gathering released on Wednesday.Meanwhile, employers added far fewer jobs than originally reported in the year through March, according to a Labor Department report released the same day.Traders now price in a 38% probability of a 50 basis point (bp) cut at the Fed’s Sept. 17-18 meeting – up from 33% a day earlier – and a 62% chance of a 25 bp reduction, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.Powell gives the keynote speech in Jackson Hole on Friday, and markets are hungry for any hints on the likely size of a cut next month, and whether borrowing costs are likely to be lowered at each subsequent policy meeting.”We favour a 25 bp cut because the U.S. economy is still in good shape – 50 bp cuts are usually reserved for situations where the economic outlook is under threat,” said Kristina Clifton, a senior economist and currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).The dollar slipped 0.11% to 145.09 yen after earlier sliding as low as 144.86 yen.Traders are hoping for more clarity on the path for Japanese monetary policy after conflicting signals from Bank of Japan Governor Kazuo Ueda and influential Deputy Governor Shinichi Uchida in recent weeks.Ueda will testify on Friday in a special session of parliament that will scrutinise the BOJ’s decision to unexpectedly raise rates at the end of last month.Australia’s dollar ticked up 0.09% to $0.6750, keeping close to Wednesday’s five-week high of $0.6761. More

China’s property sector, a key driver of the economy, has been in turmoil since 2021, with housing sales plummeting 6.5% in 2023 from the previous year and 35.9% from its 2021 peak, following a regulatory crackdown on high leverage among developers that sparked a liquidity crisis.The slowdown in the property market has led to decreased real-estate project deliveries, which in turn has resulted in lower recognised revenues for developers like Kaisa.At the same time, many developers are struggling with unsold inventory, delayed projects, and declining property values, implying a need to recognise higher impairment losses on property projects.Earlier this month, peers including Agile Group, Redsun Properties and Sunac China all flagged bigger or similar losses for the half year.Kaisa expects a net loss of 8.8 billion yuan to 9.8 billion yuan ($1.23 billion-$1.37 billion) for the half year ended June 30. It had reported a net loss of 6.6 billion yuan for the year-earlier period. ($1 = 7.1344 Chinese yuan) More

HONG KONG/BEIJING (Reuters) – Mary Meng is so busy and stressed working for a Chinese tech company in Shanghai that she can’t imagine having a second child.”The work pressure is such that you don’t even have any time to spend with your child,” said the 37-year-old mother of a primary school-aged boy. “How can I think about taking care of two children? I have no idea.”That resonates with urban residents anywhere. But given the pace of population decline and ageing in China, the impact of the fast-paced, expensive city life on birth rates should be treated with more urgency by Beijing, demographers say.China is rapidly running out of mothers. The number of women of reproductive age, defined by the United Nations as 15-to-49, is set to drop by more than two-thirds to under 100 million by the end of the century.At a twice-a-decade top political gathering last month, China announced plans to build a “birth-friendly society” – pledging to implement measures long-called for by population experts, such as lowering childcare and education costs.But, to the despair of the same experts, Beijing also vowed to encourage more people into urban areas.This policy aims to increase housing demand to prop up the crisis-hit property sector, and revive flagging economic growth through productivity gains and stronger consumption. Urban residents typically produce and buy higher value-added goods and services than their rural counterparts.But the fresh urbanisation push overlooks basic demographic theory. In the cities, people have fewer children due to high housing costs, limited space, expensive education, and because they spend most of their day at work.Couple infertility rates in China have also risen from 2% in the 1980s to 18%, versus around 15% globally – with doctors blaming the rise on factors such as stress related to urban jobs and industrial pollution. Fertility rates in China’s rural areas are slightly higher at 1.54 versus the national average of 1.3 in 2020, according to the latest breakdown from China’s top economic planner, while Shanghai’s fertility rate in 2023 was 0.6 versus 1.1 nationally. Authorities are “foolishly” driving young people “to the most birth-unfriendly big cities, which will lead to a continued decline in fertility and exacerbate the ageing crisis,” said Yi Fuxian, a demographer at the University of Wisconsin-Madison. “The suppression of fertility rates by population density is a biological law.” This phenomenon has been most evident in east Asia. Japan, South Korea and Taiwan urbanised and industrialised at a faster pace than most other economies post-World War Two. They also have the lowest fertility rates globally.While China’s birth rates are also very low after decades of a strict one-child policy, not all is lost. At 65%, its urbanisation rate is lower than the 80-90% rates in Japan or South Korea – and this could give it room for manoeuvre, demographers say. Improving rural living standards by providing better public services or liberalising land rights would have a more sustainable impact on economic growth than continuing urbanisation as they could improve birth rates, they say.”The population size is always a multiplier” in the economy, said Samir KC, professor at the Asian Demographic Research Institute at Shanghai University.’JUST SURVIVAL’To have a stable population, countries need fertility rates of 2.1. That means that for every woman like Meng, who only raises one child, another would need to have three.Poppy Yu, 21, who works at film production company in Beijing six or seven days a week, wants none.”I don’t have the money or energy,” Yu said.China’s “birth-friendly society” vision entails bringing down costs of parenting and education, lengthening parental leave, upgrading maternity and paediatric care and boosting child subsidies and tax deductions.Many countries offer such incentives. But those with successful birth policies – such as France or Sweden – stand out through greater gender equality, stronger labour rights and robust social welfare.Reducing childcare costs does not work on its own “and instead promotes a certain set of family values that demand that women take domestic responsibilities,” said Yun Zhou, demographer at the University of Michigan.Meng believes no policy would work until Chinese people start hoping again for a better life, financially.”Now everyone thinks there is no prospect at all,” she said. “No matter how hard you work, it is just survival.”($1 = 7.1469 Chinese yuan renminbi) More