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Rising sea levels, biodiversity collapse, extreme weather—these are the grisly horsemen of climate apocalypse. But don’t forget the fretting loan officers. A study published earlier this year found that US mortgage approvals tend to dip following periods of hotter-than-normal weather.
For every 1 degree Celsius that temperatures rise above average, approvals fell by nearly 1 percent—and their value by more than 6.5 percent. Lower consumer demand was only part of the problem, according to the study’s authors. The effect was mostly down to loan officers’ worries about climate change and what it might mean for the assets they were lending against.
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In other words, climate change was devaluing property before their very eyes. It’s not just the heat. In May, yet another beachfront house in North Carolina’s Outer Banks tumbled into the angry sea. It’s the sixth home lost along Cape Hatteras National Seashore since 2020…Continue reading…
By: Chris Baraniuk
Source: Banks Are Finally Realizing What Climate Change Will Do to Housing | WIRED
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Critics:
These shortages, caused in part by regulatory barriers to new construction, have had consequences such as elevated regional homelessness, housing insecurity, and high housing costs. Within this context, the term housing crisis has been applied to a number of different manifestations, with different causes and consequences.
One California housing researcher, for example, chronicled at least thirteen ways in which the term “housing crisis” has been applied to shortage and affordability issues, indicating that there is not one “housing crisis” but instead a “web of problems and dysfunctions”.
Even in regions that are not experiencing an overall housing shortage, for example, the term housing crisis has been used to refer to a shortages for specific segments of the population, such as a shortage of dedicated affordable housing for very-low income populations or permanent supportive housing for those with disabilities.
As a second definition, the term has also been used to refer to financial crises tied to the housing sector, conceptually distinct from issues related to housing shortages. In the past, the term was used in the United States to refer to problems in the financial sector related to instruments tied to housing, such as the sub-prime mortgage crisis of 2007-2008.
Similarly, “housing crisis” has been used to describe financial problems in the Chinese property sector that began in 2020 and are ongoing. The first use of the term “housing crisis”, also known as the housing crunch or the homelessness and affordability crisis, refers to related issues of decreasing housing affordability and worsening housing shortages.
Cities around the world are facing an “affordability crisis” as part of a long run trend that has persisted for decades. Economists debate the causes of this affordability crisis. Of the three strands, “the main underlying cause for the ‘affordability crisis’, which has been mounting for decades, is a combination of strong and growing demand for housing in desirable areas in conjunction with tight long-run supply constraints, both physical and man-made regulatory ones.”
Although major cities around the world face housing shortages, leading to the use of the term “Global housing crisis,” substantial variation exists across countries and across planning systems. Among developed countries, for example, cities in Japan have relatively abundant and affordable housing for their size, which some have attributed to nationalized control of zoning and easy and fast permitting for housing construction.
Most english-speaking countries, on the other hand, stand out for planning systems that enable NIMBY obstruction of housing, with prices rising and housing falling into shortage as a result. Exceptions include Houston non-zoning approach with no restrictions on specific land use (YIMBY) but with other developmental code. Developed European countries, which favor higher density construction than Anglophone countries, have followed a path intermediate between these two.
The United States currently faces a housing crisis defined by shortages of housing that differ in scope and effect depending on region or segment of the population. Decades of under-building in economically prosperous metros has led to regional housing shortages with national implications. In the 19th century, housing development in the United States was characterized by rapid urban growth in economically productive places.
Throughout the 20th century, however, a number of regulations that were designed to block in-fill and direct greenfield development took hold, such as exclusionary zoning. These regulations had the net effect of reducing housing construction and reducing the ability of regional housing stock to adjust to changing market conditions.
Beginning in the last quarter of the 20th century, market-wide housing shortages have existed in a growing number of markets throughout the country, starting in prosperous coastal regions, such as Boston, New York, or the California Bay Area. In the last two decades, these shortages have spread from coastal superstar cities to affect broader areas of the country, so that on average there is a deficit of housing nationwide.
Rental vacancy rates, for example, which are one marker of the balance of housing supply, have declined across the country. While, in a balanced market, rental vacancy rates should fall between 7 and 8 percent, only one U.S. census region, the South, achieved target levels on average in its metro areas as of 2021.
These regional housing shortages have had nationwide effects. Rates of migration within the United States have fallen, housing costs have risen in areas that would otherwise provide quality jobs, and incomes from region to region have increasingly diverged. Within areas experiencing these shortages, effects are especially acute among the young, the poor, among renters, those living in crowded conditions, and those experiencing homelessness.
Areas with market-wide housing shortages have significantly higher rates of homelessness than those with adequate or surplus housing stock: Variations in rent-levels and vacancies are chief factors explaining regional variations in homelessness rates.
After the COVID-19 pandemic, some baby boomers whose children have moved away have found it prohibitively expensive to move into smaller homes, a paradox caused by the higher prices of newer homes, tax benefits given to long-time owners, higher interest rates, and low supply of appropriately-sized housing caused by restrictive zoning that prohibits accessory dwelling units or requires single-family homes.
In addition to market-wide housing shortages in certain regions of the United States, the term “housing crisis” has been used to describe persistent shortages of non-commodity and supportive housing provided to vulnerable members of the population. Even in regions with relatively abundant market-rate housing, the market can fail to supply safe and sufficient housing to populations with very low income or disabilities that impair independent living.
Insufficient public funding has contributed to a distinct housing crisis affecting these groups. Even regions with relatively abundant housing supply and low rates of homelessness, such as Mississippi, face challenges with street homelessness due to factors like addiction, as well as issues with housing quality. Shortages of housing affordable housing are discussed in the article “Housing gap” under the section “United States.”
In addition to shortage and affordability issues, the term “housing crisis” has been used for overlapping concepts such as a “fair housing crisis,” involving residential discrimination and effects of segregation; an “eviction crisis”; issues of gentrification and displacement; and environmental concerns. Eviction, displacement, and forms of housing inequality are worsened by and related to the shortage and affordability crisis, but also have causes of their own and require distinct solutions.
Many homebuyers purchase housing on credit in the form of a mortgage, but changing economic conditions can leave them unable to pay back their loans. Guren and McQuade (2020) argue that widespread foreclosures can interact with the housing market to amplify declines in asset prices, leading to prices below levels determined by fundamentals:
“When the housing market is hit by a shock that lowers housing demand and induces some foreclosures — for example a drop in employment . . . the dynamic interactions between falling prices, defaults, and credit constraints keep growing numbers of buyers out of the market. The scarcity of buyers lowers prices, intensifies the buyers’ market, and leads to a downward price-default spiral.”
Housing Crisis’ Can Take On Different Meanings: Here Are 5 Examples”. HomeLight Blog. Retrieved 2023-12-30.
Deconstructing the ‘Housing Crisis’”. belonging.berkeley.edu. Retrieved 2023-12-30.
Housing policy and affordable housing” (PDF). London School of Economics: Centre for Economic Performance, Occasional Paper (56).
What Can Be Done About the Global Housing Crisis? Plenty”. Wired. 2022-04-24. Archived from the original on 2022-04-24. Retrieved 2023-12-30.
Houston doesn’t have zoning, but there are workarounds.
The Anglosphere needs to learn to love apartment living”. www.ft.com. Retrieved 2023-12-30.
The Closing of America’s Urban Frontier
Supply Skepticism Revisited: What New Research Shows About the Impact of Supply on Affordability”. furmancenter.org. Retrieved 2023-12-30.
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