AT Housing DA - Michigan 7 2023 BFHGR

AFF---Housing DA
Uniqueness
2AC---NU---Explode now
Rates die in a few months.
Preston Caldwell, 5-25-2023, a senior U.S. economist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He also leads Morningstar's China macroeconomics research team. Previously, he served as a member of the energy sector team, covering oilfield services stocks and helping to craft Morningstar's long-term oil price forecasts. Before joining Morningstar in 2016, Caldwell earned his Master of Business Administration from Rice University. Caldwell also holds a bachelor's degree in economics from the University of Arkansas. He’s an intellectually curious and relentlessly hard-working investment research analyst with unique combination of experience in fundamental, intrinsic value-oriented equity analysis along with top-down macroeconomic analysis. "Why We Expect the Fed to Cut Interest Rates in 2023," Morningstar, Inc., https://www.morningstar.com/markets/when-will-fed-start-cutting-interest-rates ---ML
When Will Interest Rates Go Down?
First, we expect the Fed to pause its rate hikes by summer 2023 (the May hike was the last one, in our view). Then, starting around the end of 2023, we expect the Fed to begin cutting the federal-funds rate.
The Fed will pivot to monetary easing as inflation falls back to its 2% target and the need to shore up economic growth becomes a top concern.
1) Interest-rate forecast. We project a year-end 2023 federal-funds rate of 4.75%, falling below 2.00% by mid-2025. That will help drive the 10-year Treasury yield down to 2.25% in 2025 from an average of 3.5% in 2023. We expect the 30-year mortgage rate to fall from an average 6.25% in 2025 to 4% in 2025.
That means collapse imminent.
Gabrielle Olya, 6-25-2023, "Barbara Corcoran Says Housing Prices ‘Are Going To Go Through The Roof’: Here’s When," Yahoo Finance, https://finance.yahoo.com/news/barbara-corcoran-says-housing-prices-110050018.html
Lower Interest Rates Will Mean Higher Home Prices
We’re currently experiencing a “bottleneck” in the real estate market, Corcoran said, but this won’t last forever.
“Sellers don’t want to move from their apartment or their home because they don’t want to take on higher interest rates,” she said, “and buyers are too afraid [to buy] because they are getting less house [for the price]. So you’ve got a standoff going on. But things are changing.”
Corcoran believes there will be a major swing in the real estate market as soon as interest rates drop.
“The minute those interest rates come down, all hell’s going to break loose and the prices are going to go through the roof,” she said. “[Right now sellers are] staying put. But they’re not going to stay put if interest rates go down by two points.
“It’s going to be a signal for everybody to come back out and buy like crazy, and the house prices [will likely] go up by 20%,” she said. “We could have COVID [market] all over again.”
Terminally nonunique---we’re already seeing signs of a housing bubble.
Natalie Campisi and Robin Rothstein, 5-16. Consumer finance reporters for Forbes Advisor. 5-16-23. “Will The Housing Market Crash in 2023? Experts Give 5-Year Predictions.” https://www.forbes.com/advisor/mortgages/real-estate/will-housing-market-crash/
The Federal Reserve Bank of Dallas identified signs of a “brewing U.S. housing bubble” in a 2022 report. Though the sharp increase in home prices doesn’t indicate a bubble, the report found, there are other fundamental factors to consider. These include “shifts in disposable income, the cost of credit and access to it, supply disruptions, and rising labor and raw construction materials costs are among the economic reasons for sustained real house-price gains.”
When “there is widespread belief that today’s robust price increases will continue,” the housing market becomes unhinged from those fundamentals, the Dallas Fed report revealed. “If many buyers share this belief, purchases arising from a ‘fear of missing out’ can drive up prices and heighten expectations of strong house-price gains.”
2AC---NU---No Asset Bubble
No asset bubble for a long time
Vander Stelt, 3-29. Real Estate Agent in Northwest Indiana. 3-29-23. “45,000,000 Reasons There is No Housing Bubble in 2023.” https://quadwalls.com/blog/reasons-there-is-no-housing-bubble-in-2021/
A bubble is a term used to figuratively describe an inflating event with the perception it will burst. As an Indiana Realtor® I am here to burst your bubble: There is no housing bubble in 2023, and there won’t be one anytime soon. Just because prices are rising doesn’t mean there is a bubble.
The cottage industry of amateur economists has taken off in the wake of rapidly rising home prices starting in 2020. This surge of home prices has content creators and click-baiters flocking to YouTube, Tik-Tok, and every other low-cost platform espousing their beliefs home prices are in a bubble destined to burst and set home values back 20%, 30% or 50%.
They are wrong. There are 45,000,000 reasons why the U.S. housing market is not going to crash.
The Pinch Causing The Booming Housing Market Of 2023
I call the recent and rapid increase in U.S. home price prices the pinch. There are five distinct circumstances causing the pinch in the U.S. housing market.
1. COVID-19 Interrupted Major Life Events
Yeah, I am tired of blaming it all on COVID, too. But, this is legitimate. The U.S. housing market is driven by major life events. These include births & deaths, children growing up or moving out, new relationships, engagements, marriages, & divorces, and graduations, job placement, promotion, demotion, & relocation. A lot of this was delayed in 2020. But, now all the big events in life are starting up again. This is triggering demand in the housing market.
2. Long Term Low Interest Rates
Low rates means the cost of servicing the debt is less. Therefore, the seller can charge more for the underlying asset the buyer will borrow against. Pretty simple, right? Low rates push prices up.
3. Buyers Have Cash. Lots Of It.
Homebuyers, including plenty of first-time homebuyers, have the downpayment money. The number one issue with buying a first home is and always has been coming up with the down payment. But, this latest generation of homebuyers is less indebted compared to their parents. Time and again I have been really surprised at the number of 22 to 28 year olds wanting to buy a home who have the down payment and closings cost money.
But, now add in that shitshow which was 2020.
Do you know what the traditional savings rate is for Americans? And, do you know what it was in 2022 and the start of 2023? Plenty of wannabe homebuyers received stimulus checks, too. And more and more the bona fide economists are saying much of the money went right into people’s savings accounts.
U.S. savings rates in 2021 smashed the typical 4% to 8% monthly rate.
U.S. savings rates increased dramatically during the 2020 COVID pandemic and remian elevated compared to historical norms
Lastly, current home owners have seen their home values only increase over the last ten years. This means their equity position has improved from both paying down the loan plus asset appreciation. This is giving current homeowners more cash to use for their trade-up home purchase for either the down payment or to lower the borrowed amount.
4. Not Enough Homes Were Built Between 2010 and 2020
Home builders simply have not built enough homes over the last ten years. The majority of the market still wants to own a single family home in a neighborhood with low crime rates and good schools. And there just are not enough of these homes to meet demand.
5. Demand Is Exceptionally High
There is crushing demand for new homes coming from many different population groups. 20 years ago we talked so much about prepping for the Baby Boomers and how they will dominate the economy. In all that discussion, I think we forgot about the tens of millions of Gen X, Millennials, and Gen Z. Have you seen these population numbers?
Link
2AC---Link Defense
Even if house prices were inflationary, the spread of demand would lessen market pressure
Austin Mackell, 20. Freelance journalist. 12-27-20. “How a Basic Income could Lower Housing Costs.” https://austingmackell.medium.com/how-a-basic-income-could-lower-housing-costs-2b1f1bb1cc28.
One of the most common objections raised to a basic income is that house prices and rents will simply be raised and erase all the income gains, leaving people back where they started. Even if all other factors were held static it seems likely that competition between landlords and home sellers — and with those selling other asset classes — would act as something of a brake on price increases, preventing them from absorbing all of the increase in income.
But other factors won’t be held static. For a start there would be a decoupling of the labour and housing markets which would increase vendor-side competition in the housing market, since there would be a greater number of people who could quit their current job and move where housing is cheaper. This would compliment and overlap with the existing trend towards remote work. The increased spending power and arrival of new customers in country towns would then create more employment opportunities, making them even more attractive relative to the city. It would of course put upward pressure on regional house prices, but the spread of demand would lessen pressure on city markets.
In Australia we’ve recently got a sense of the short term limits of this effect, as the pandemic increased city-to-country transitions, especially along the east coast, causing house prices in regional areas to rise, often pricing out locals. But in the longer term new housing stock could easily be added in these areas — at lower cost than in the cities.
But there are other factors lurking behind those rural price hikes, the same factors which prevented a collapse of house prices in the city, despite the biggest economic contraction on record.
Part of it is the Jobkeeper wage subsidy and increased Jobseeker unemployment payments, and the government allowing people to access up to $20k of their retirement funds, and directly incentivising home building and improvement (my family and I were recently evicted so my landlord could renovate, which the government was incentivising to the tune of $25k).
But the bigger part is simply cheap credit. House prices have remained high for the same reason the stock market has remained high: Because interest rates are effectively below zero. In the US is what’s been called a “fed driven economy”. Cheap money for those who already have assets and/or a good credit rating has sustained and even expanded what was already a huge asset bubble. You can borrow money, buy tech stocks, bitcoin, gold, or some other relatively safe asset -like real estate- and watch the value rise at a rate which far outstrips the interest on your debt.
Even if prices go up---there’s no impact.
Marco Santarelli, 6-9. Investor, author, 5000 entrepreneur, and the founder of Norada Real Estate Investments. Host of Passive Real Estate Investing. 6-9-23. “Will Home Prices Drop in 2023: Housing Market Predictions.” https://www.noradarealestate.com/blog/housing-prices/.
Inflation is soaring, and there is a fear of an impending recession in the country. However, the majority of real estate professionals do not believe that the housing market is in a bubble or poses a threat to the faltering economy.
Housing caused the worst financial crisis in recent memory. When shoddy mortgages crumbled, the nation was left with foreclosures, numerous new houses remained empty, and millions of Americans were suddenly underwater. Throughout the preceding century, the housing market met considerable barriers, but none, with the exception of the Great Depression of 1929, led to the decrease in home values that happened during the Great Recession of 2007.
It is also important to note that not all economic downturns dampen the real estate market. Despite the economic downturn, the home market and demand remained robust during the 2001 recession. The housing market has been subjected to a number of severe hurdles during the course of the previous century; but, with the exception of 1929's Great Depression, none of these challenges have resulted in a decrease in house values comparable to that of 2007's Great Recession.
The housing market's recent pandemic boom with skyrocketing prices, bidding wars, and an influx of investors has parallels to the previous time. However, this time, the majority of real estate professionals believe that the housing market won't crash or trigger a recession and may even assist the country's recovery. The mortgage sector has taken action against loans that ballooned in size or were intended for borrowers to fail. Only purchasers with consistent, verifiable income may now qualify for mortgages.
This has resulted in a significantly lower risk compared to the Subprime lending during the Great Recession of 2005-2007. The majority of bad mortgages have been eliminated, and lenders have stricter requirements on borrowers. The housing shortage is too severe with many more individuals trying to purchase and rent houses than there are available.
Year-over-year home price growth decelerated in 2022 as mortgage rates rose and housing affordability declined. With mortgage rates continuing to remain high, home prices are predicted to decline in the near term. However, experts do not anticipate the widespread unemployment that characterized the Great Recession and also believe that the recession will be quite brief if it occurs. This means fewer homeowners will be unable to pay their mortgages and those who are struggling may decide to sell their homes at a profit.
Rates won’t skyrocket BUT even if there is a bubble---crash is unlikely
Stephanie Landsman, 22. Senior content producer of CNBC. 5-16-22. “Home affordability at 2007 bubble levels, but crash is unlikely: Blackstone’s Joe Zidle.” https://www.cnbc.com/2022/05/16/home-affordability-at-2007-bubble-level-but-crash-unlikely-blackstone.html
A major Wall Street firm is drawing a striking parallel to the housing bubble.
Blackstone’s Joe Zidle calls homes almost as unaffordable as the 2007 peak. Yet, he believes a crash is unlikely due to a major difference: Most owners aren’t using their homes like an ATM.
“That caused so many people to go upside down,” the firm’s chief investment strategist told CNBC’s “Fast Money” on Monday. “The value of what they owed was greater than the value of their home.”
Unlike the housing bust, Zidle adds home equity is at an all-time high and household balance sheets are strong.
“You haven’t had overbuilding. You haven’t had a drop in credit or lending standards,” he noted.
Blackstone is known for buying scores of distressed residential properties tied to the 2008 financial crisis. It’s still a major player in real estate, with investments in rentals, the rent-to-buy market and student housing.
“Because you have very little excess in housing, I think you end up having less risk,” he said.
Plus, Zidle cites a strong jobs market.
“Historically, housing ends up being more highly correlated to labor markets than it is to mortgage rates,” he said. “As long as the jobs market remains relatively healthy, I think housing will as well.”
His forecast comes as Wall Street gets ready for key reports this week on the consumer and housing. Investors will get earnings from major retailers including Walmart, Home Depot, Lowe’s and Target. Plus, numbers on homebuilder sentiment and home sales are due.
Zidle’s call reflects a 12-month time frame. Within that horizon, he sees the Federal Reserve hiking interest rates deeper into next year than the Street anticipates due to persistent inflation.
“Ultimately, the Fed is going to have to hike interest rates until something breaks,” added Zidle. “When we do get to a point where something breaks, I don’t think it’s housing.”
He expects the benchmark 10-year Treasury Note yield to hit 3.5%. It’s a level he expects the housing market to handle. On Monday, it was around 2.8%, up 90% so far this year.
“You might see home prices generally flatten out. You may have pockets of weakness where home prices in some regions might fall,” Zidle said. “But the idea of having a national and a prolonged drop in housing as the economy eventually rolls over, I think is still a relatively low probability.
UBI won’t lead to inflation
Khalil Esmkhani, 21. Assistant Professor of Finance. 3-23-21. “Universal Basic Income and the City.” https://jainfamilyinstitute.org/wp-content/uploads/pdf/jfi-ubi-and-the-city-2021.pdf.
The most important results for the housing market are that the lower income for those at the top leads to lower rents and prices per square foot, and to a lower home ownership rate. The housing expenditure to income ratio falls as well, suggesting that affordability improves as the real cost of housing falls. However, despite the lower cost of housing, less housing is built and used, since the city is, on average, poorer. This alleviates concerns that UBI would lead to inflation of house prices and rents.
No rising prices
Stephanie Nunez, 20. Lead researcher at JFI; masters in economics and PhD in sociology. “New working paper explores a UBI in NYC and finds it would not lead to housing inflation.” https://basicincometoday.com/new-working-paper-explores-a-ubi-in-nyc-and-finds-it-would-not-lead-to-housing-inflation/.
Second, and perhaps most interestingly, the authors find that contrary to common assumptions, a UBI does not generate housing market inflation. Instead, the combination of the benefits and taxes lead to a net reduction in rents and housing prices:
Housing consumption (dwelling size) falls by 2.8% and 6.8%. Lower demand for housing leads to lower rents, which fall by 3.8% and 9.0%, and lower house prices, which fall by 1.6% and 3.5%. The ratio of housing expenditures to income also falls, implying that housing becomes more affordable.
Rents go down both absolutely and relative to housing expenditure, leading to an increase in housing affordability. This comes, however, at the cost of a reduction in average dwelling size. These findings suggest that a UBI is unlikely to usher in a wave of inflation, and that pursuing UBI policy in coastal cities suffering from a shortage of affordable housing is not inherently misguided. Here we should note again the power of general equilibrium models to provide counter-intuitive findings; this is very much the opposite result as the one given by an informal partial equilibrium analysis.
2AC---Link Turn
UBI drives down prices
Alex Howlett, 19. Host of Boston Basic Income; Founder at Project Greshm. 7-1-19. “Universal Basic Income Fixes the Housing Market.” https://medium.com/human-capitalism/universal-basic-income-fixes-the-housing-market-639523c22b14.
What Wilkinson fails to recognize is that the economy doesn’t actually need all those people to be living near those jobs. The people need the jobs, but the jobs don’t need the people. What if people had more freedom to live wherever they wanted without having to give so much consideration to the job market?
That freedom is exactly what Universal Basic Income (UBI) gives us. UBI is an unconditional income paid to every individual person. It solves the problem of how to get spending money into people’s hands. And it accomplishes this independently of the labor market. UBI is an income that’s not tied to any particular location.
By providing people more freedom to live in different places, UBI does the equivalent of flooding the market with cheap homes. That’s going to drive down rents in cities where housing is currently tight. It’s going to drive down real estate prices in general.
This is a good thing. Cheaper housing is better for people. Homes shouldn’t be treated as investments in the first place. If you’re invested in real 

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