The Only Thing We Learn From History Is That We Learn Nothing From History

A weekend topic starting with WGME. “Home sales in Maine continue to rise. According to the Maine Association of Realtors, the median sales price for single-family homes in the state reached $425,000 in May. In May of 2019, the median sales price for single-family homes in Maine was $230,000, marking a roughly 85 percent increase in the last six years.”

Yahoo Finance. “Priced out of your local housing market? It might be time to consider a move to the Midwest. As home prices and mortgage rates remain high, just three US metropolitan areas — St. Louis, Detroit, and Pittsburgh — have homes for sale at prices that are, on average, comfortably affordable on a median income. Generally speaking, spending 30% of one’s income or less on housing is considered affordable. Incomes haven’t kept up with home prices and interest rates, meaning the number of cities where most of the homes for sale meet the ‘30% rule’ has shrunk. In the St. Louis area, Realtor Dawn Griffin has seen budget-conscious buyers gravitate toward towns like Affton and Overland, two close-in suburbs where homes can still regularly be found for under $250,000. While Griffin says the pandemic days of home prices jumping double-digits in a matter of months seem to be over, prices in St. Louis are still rising, albeit at a more typical pace in the single-digit range. ‘It seems to be a normal kind of appreciation — a healthy kind of appreciation,’ Griffin said. ‘I don’t know that we’ll see a decrease in prices.'”

From NBC Dallas. “The Texas housing market continues to challenge sellers as inventory reaches its highest level in 14 years, according to new research from the Texas Real Estate Research Center. High interest rates and economic uncertainty are keeping many buyers away, but some buyers are finding opportunities to lock in mortgage rates as low as 2.5%. Dallas realtor Ben Wilson explained how he helped one Plano family buy a home with an assumable loan. ‘So my buyer was able to secure a 2.8% loan just this year,’ Wilson said. ‘Given that FHA loans are 6.5% right now, they save about $1,200 in their mortgage payment every month.’ Only government-backed loans are assumable, such as FHA, VA or USDA loans. Buyers still have to qualify and cover the gap between the loan balance and the sales price. Wilson’s clients had cash, but realtor Terry Hendricks said specialized lending is another option. He said buyers are still just coming to the table with their loan payment and closing costs. ‘I have a list of about 400 homes here in the Dallas market that’s actively on the market right now with a government-backed loan,’ Hendricks said.”

Maryland Matters. “Squatting in Maryland isn’t new, but recent viral videos and sensationalized news stories have raised concerns about it as a growing threat to property owners and neighborhood safety. This framing is misguided. This isn’t about relative ‘bad actors.’ It is about systemic failings forcing people into dire situations. According to the National Low Income Housing Coalition, a full-time worker earning minimum wage in Maryland would need to work 100 hours a week just to afford a modest two-bedroom apartment at fair market rent. And it is even worse in Baltimore, Prince George’s County and Montgomery County, with decades of rent increases far outpacing wage growth. Squatting is then the visible end of an iceberg.”

“Since the 1980s, Democratic and Republican administrations have prioritized tax credits for housing development rather than aggressively building deeply affordable public housing and have not established units for the lowest-income sector. We have a plethora of buildings developed through the Low-Income Housing Tax Credit (LIHTC), but none of the housing is operationalized at the highest need. In most cases, these homes have been abandoned – some in foreclosure limbo, and most owned by absentee owners.”

WINK in Florida. “Cape Coral is facing a challenging housing market, with a recent Wall Street Journal headline declaring it the worst in America. This comes as a shift from the previous trend of families flocking to the area. According to Zillow, there are thousands of homes currently for sale in Cape Coral. Many of these properties are sitting empty and foreclosed. An analysis showed home prices in Cape Coral-Fort Myers have dropped by 11% over the last couple of years, with 52% of homes experiencing price cuts. One example cited by the Wall Street Journal involved bought three years ago by an investor looking to rent it on Airbnb, is fully furnished and has a pool. The asking price started at $675,000, but the seller has cut it to less than $500,000, about $100,000 below the purchase price. Cape Coral also has the highest percentage of homeowners underwater in the country, with nearly 8% owing more on their mortgages than their homes are worth. Foreclosures are another issue plaguing the area. According to ATTOM Data, Cape Coral saw over 100 foreclosure-related actions in May, marking a nearly 50% increase from April and more than a 60% increase from May of last year.”

From Realtor.com. “Los Angeles has always been the home of movie stars and blockbuster shoots, but now, it seems many people are running for the hills—and we don’t mean Beverly Hills. Once the epicenter of the worldwide film industry, La-La Land now seems more ‘like a Rust Belt crater,’ according to a recent report from Vulture. ‘It’s so grim, like a sad company town where the mill is closing,’ one anonymous executive told the publication. But without movies and without celebrities, what does that mean for the overall Los Angeles–area real estate market? Spoiler alert, it’s not great. ‘New fire maps are coming out for the state in late July, and many areas that weren’t initially deemed to be in a high or very high fire zone now are, which has created even more insurance challenges,’ says Cara Ameer, a bicoastal agent with Coldwell Banker ‘The cost of obtaining insurance is expensive and may be a deal breaker for many.'”

“While outmigration has been a recent phenomenon in California, Ameer believes that every metropolitan area goes through cycles of exodus as well as return. ‘Los Angeles/Southern California is resilient, and the optimal weather along with the diversity of the beach to the mountains and all in between make it hard to resist,’ says Ameer. ‘Plus, since it’s a slower market and there’s never been a better time to buy in Southern California than there is now.'”

The Edmonton Journal in Canada. “Many Edmonton renters may be considering home ownership, a new survey has found, but few plan to make the jump to ownership anytime soon. That’s good news for investors considering purchasing a property to rent amid strong economic conditions and continuing migration from other provinces. Average prices for resale apartments and townhomes are growing. Given still strong migration is bolstering rental demand and ultimately resale prices, Edmonton remains fertile soil for investors, adds Tom Shearer, broker/owner of Royal LePage Noralta Real Estate in Edmonton. ‘You can probably rent your place for a little more next year, and it’s likely to rise in value, too, so it’s a great time to be a landlord.'”

The Globe and Mail. “Canada’s household debt-to-GDP ratio has remained at or above 100 per cent for a decade – currently the highest among the world’s 10 largest economies. What sets Canada apart is the scale of its household debt, which increases the country’s exposure to interest rate hikes and economic downturns. Of the roughly $3-trillion in Canadian household debt in the first quarter, nearly 75 per cent is tied to mortgages – underscoring the central role of housing unaffordability in the country’s financial vulnerability. Between 2000 and 2010, Canada’s household debt-to-GDP ratio was lower than those of both Britain and the U.S. But since 2011, it has surpassed both, and the gap has continued to widen. A key divergence emerged in 2009, when the ratio of average home price to disposable income exceeded nine. Since 2015, that figure has remained above 10 — significantly higher than in Britain or the U.S.”

CBC News in Canada. “Tyler Fransen lost his Saskatoon home this spring after he missed mortgage payments due to financial circumstances and life situations that sent him over the tipping point. ‘I just felt a little defeated,’ said Fransen, whose father recently died from cancer. Fransen lost his job as a contractor during the COVID-19 pandemic. Then came inflation on materials, gas and groceries. Paying for his mortgage became more and more difficult. Fransen isn’t alone in his struggle. Many homeowners in Saskatchewan and across the country are falling behind on mortgage payments, according to the latest statistics. ‘It’s not great news, but it’s an improving picture. Whereas areas like Ontario are still seeing significant increases,’ said Rebecca Oakes, vice-president of advanced analytics at Equifax. ‘I know for Ontario in particular, I think this is the highest level we’ve ever seen.'”

“Matt Fabian, director of financial services at TransUnion Canada, agreed. Fabian said many people are facing payment shock that comes with renewing mortgages at rates that are much high than what was available during the pandemic. Inflation making everything else more expensive is a double-whammy. ‘You might be renewing at a double or triple the rate that you’ve ever had,’ Fabian said. ‘That has created this payment shock where we’ve seen average monthly mortgage payments go up anywhere from 10 per cent to double.'”

From Dutch News. “Did you know you can borrow less for a mortgage this year? Government advisers have quietly reduced the maximum borrowing factor for 2025 and mortgage brokers have noticed. If your salary didn’t rise – as in many freelance or contract jobs – you cannot afford to buy the same house as last year. And that’s even before sellers and estate agents put on this year’s price tag. Why didn’t you hear about this? Because the Netherlands is on a merry roundabout of deceiving itself about its housing market. In Amsterdam for example, the council has decided it is internationals and the companies employing them that are responsible for the widespread sense nobody can afford to live in the capital any more.”

“In 2023, the former housing minister Hugo de Jonge removed one of the last brakes on lending. Previously, you could only account for part of a second partner’s salary to get a mortgage. The Nibud household budget institute says before 2012, a second income was not counted at all. Even if both partners worked, if one lost their job or needed to work less, for whatever reason, the other could pick up the slack. The Nibud called this an ‘implicit buffer’ and it has been removed. It could be put back. If the second salary were counted at 90%, as it was before 2023, mortgage capacity would go down. House prices would follow. Another knob to turn is borrowing levels. The reason Dutch houses are so expensive is because people (are allowed to) borrow so much money. The Netherlands has Europe’s highest borrowing compared with GDP – almost 100%. In the Netherlands, top earners can borrow 5.5 times their salary and up to 100% of a home’s value (or even 110% for energy-efficient renovations). If the government limits these lending factors, house prices will react. Dutch homes are unaffordable because that’s what officials want.”

The Japan Times. “China’s economy today bears an unsettling resemblance to Japan’s in the 1990s, when the collapse of a housing bubble led to prolonged stagnation. But Japan’s ‘lost decades’ were not the inevitable result of irreversible trends; they reflected policy blunders, rooted in a flawed understanding of the challenges the economy faced. Japan’s housing bubble was preceded by sharply rising ratios of home prices to annual income, with Tokyo’s surging from eight in 1985 to 18 in 1990. Japan has escaped its deflationary trap only to become ensnared in a long-term inflationary trap, which, by reducing purchasing power and parenting capacity, will reduce fertility further. By fueling a demographic collapse, Japan’s approach to ending its ‘lost decades’ has set the stage for ‘lost centuries.'”

“This should serve as a cautionary tale for China, which is confronting real-estate and demographic crises of its own. In recent decades, rapid urbanization, policy-induced artificial land scarcity, the dependence of local governments on land sales for revenue, and heady expectations of future growth caused real-estate prices to soar. But the number of Chinese urban dwellers aged 28-32 peaked in 2019 – and the real-estate bubble burst shortly thereafter. Declining prices have decimated household wealth, with losses equivalent to China’s annual economic output. This has undermined consumption, employment, borrowing, and investment.”

“The crisis that is brewing in China is more severe than the one Japan faced. For starters, China’s housing bubble is much larger. For example, residential investment, as a share of GDP, was about 1.5 times higher in China in 2020 than in Japan in 1990. Property accounted for about 70% of Chinese households’ total assets in 2020, compared to around 50% in Japan in 1990. China’s price-to-income ratio today is more than twice that of Japan in 1990. But perhaps the most ominous portent is that China’s government continues to tout a potential growth rate of 5%, with some prominent figures suggesting that it could achieve rates as high as 8%. To get there, policymakers are pursuing measures with high short-term returns – such as expanding the supply of affordable housing and carrying out quantitative easing – while all but ignoring the economy’s weak fundamentals. As Hegel famously put it, ‘The only thing we learn from history is that we learn nothing from history.'”