What’s your housing bubble prediction for the new year? From KOLD. “Whether you’re looking at houses in Tucson, around the state of Arizona or even nationwide, experts can all agree this year’s housing market will go down in history. ‘We don’t think that home prices are going to go backwards and go down,’ said Kevin Kaplan, the vice president of marketing at Long Realty. ‘They’ll continue just not at that feverish unmanageable rate.’”

From Bankrate. “After an intense run-up, home prices seem to be cooling at last. The median price of homes sold by Realtors soared from $280,700 in March 2020, the start of the pandemic, to $362,800 in June 2021, an increase of 29 percent. However prices have held in the $350,000 range since then. ‘You can’t keep going up 20 percent a year. That’s obviously not sustainable,’ says James McGrath, co-founder of Yoreevo, a New York City-based real estate brokerage. ‘But at the same time, there’s not an argument that prices are going to go down. I don’t really see much that could tip the market dramatically.’”

The Houston used shack salespeople. “Data from Realtor.com released in November showed that listing price reductions had more than doubled since February 2021. And the average days on market (an indicator of how long it takes a home to sell) has been slowly creeping up since June. According to George Ratiu, director of economic research at Realtor.com, ‘Prices and sellers reached for the moon [last] year. It looks like we are now about to move back to earth.’”

The Vermont Digger. “Real estate markets appear to be entering the third major cyclical upswing in the past 40 years, said Tom Kavet, the Legislature’s top economist, with the most recent and similar spike in home prices taking place right before the 2008 crash. ‘This is very much looking bubble-like,’ he said.”

The Globe and Mail in Canada. “The Globe asked dozens of experts to make sense of the economy in the year ahead. Ben Rabidoux, founder, Edge Realty Analytics: ‘Investment in residential housing now accounts for roughly 42 per cent of all investment in the country. In the past two decades, that lofty level has only been hit by a couple of other OECD countries – namely Ireland and Greece at the height of their respective housing bubbles. It didn’t end well for them.’”

“‘The issue here is twofold. On one hand, residential investment has surged in recent years to hit a record share of GDP. But the bigger issue is a chronic underinvestment in research and development – the sort of spending we need to ensure long-term productivity gains. Canada ranks near the bottom of OECD countries in terms of R&D expenditures as a share of GDP, and we’re the only country that has seen that metric actually fall since 2000.’”

“It raises an important question: If we’re not making the necessary investments to ensure long-term economic growth, what will support these lofty house prices in the long term?”

The Guardian. “The crisis engulfing the Chinese property sector appears certain to intensify in 2022 as companies face debt repayments in the new year that are double those of the final months of 2021. In total, China’s developers owe $19.8bn in dollar-denominated offshore debt in the first three months of 2022, analysts at Nomura said. That is almost twice as much as the $10.2bn they were faced with in the final quarter of 2021. Nor is there any respite in the second quarter of 2022, when they must find another $18.5bn.”

“Nomura says they must also find 1.1tn yuan ($172bn) in backdated pay owed to construction workers before the lunar new year starts at the beginning of February.”

“Michael Pettis, professor of finance at Peking University, says the situation could morph into a systemic crisis that undermines the whole debt-ridden economy – the stuff of nightmares for Beijing’s political class, who are desperate to prevent contagion from the property crisis hurting ordinary Chinese.”

“‘Everyone made the same bet on inexorably rising property prices, especially the developers, who levered to the hilt, overpaid for land at auctions, and scooped up as much real estate risk as they could take on,’ he said. ‘The problem of course is if property prices ever stop rising, because everyone has made the same bet everyone’s balance sheet starts unravelling at the same time, and it immediately becomes a systemic problem. That is what has happened in China.’”

From six months ago: “Over a decade’s worth of rate suppression from the Fed, without their ever having ended the policy after the 2007-2009 financial crisis, has left market fundamentals desiccated by the hunt for positive yields. What’s left at this point is a Hobson’s choice between safe investments with a negative expected return, after factoring in current and expected future inflation, and risk assets that everyone agrees are in a bubble which may generate stellar returns for a bit longer until a point of future collapse, which nobody could foresee, takes them back down to earth.”

One year ago: “Inflation vs deflation. With the central bank pumping (oops … buying financial assets ), i expected some increasing levels of inflation. But so many are predicting less than 2% inflation for a long time. Now we are see an early glimmers of deflation in Japan etc.”

A reply: “My prediction is neither any significant inflation or deflation according to official measures. Rather a continued move towards a command price controlled economy. The government will play a greater role in controlling the prices of all commercial goods and services and financial assets. Market based principles have been suspended indefinitely by central planners never to be seen again until they return with a hellish vengeance.”