DA - Housing - Michigan 7 2023 BFHGR

Housing DA
Top Shelf
1NC --- Shell (UBI)
A. Housing market is recovering now --- prices are under control
Lance Lambert, 6-21-2023, the editorial director of Fortune Education. He also writes the weekly Fortune Analytics newsletter and reports on topics ranging from the future of work to the housing market. "Even hard-hit Western housing markets are stabilizing—just look at KB Home's latest cancellation rate," Fortune, https://fortune.com/2023/06/21/housing-market-improvement-for-homebuilders-and-western-markets-home-price-correction/ ---ML
“The improvement in [housing] demand we started to see in February was sustained throughout our second quarter, as we achieved monthly sequential increases in our net orders,” Mezger told investors on Wednesday. “We are well-positioned to achieve our revenue target for 2023.”
What’s going on? Two things.
First, the national U.S. housing market stabilized this spring, as a shortage of existing home inventory and seasonality did just enough to put the market back into equilibrium
B --- UBI causes housing price inflation --- that disrupts the economy and turns the case
Malcom Henry, ND. Senior executive, culturally competent leader with expertise in relationship building, networking. “Popping the Housing Bubble.” https://citizen-network.org/library/popping-the-housing-bubble.html.
UBI enthusiasts can see the prospect of their dream coming true as our economies – so utterly reliant on wage-earning – struggle to come to terms with lockdown. But a hasty introduction of UBI without fully understanding its effects on some essential components of our economy could undermine its effectiveness and provide its opponents with ammunition.
UBI will significantly increase the disposable income of the population as a whole, providing the productive economy with lots of opportunities for new business. However, not all of these opportunities will be beneficial to us, individually or collectively.
Some of the things that we spend our money on are essential to life, and the markets for some of these essentials are effective monopolies because of the infrastructure that’s required to deliver them – electricity, gas, water, etc. Even with regulation the people who control these markets are adept at inflating prices whenever there is an opportunity to do so, and UBI is a golden opportunity.
At first glance housing might appear to lie beyond the reach of such avaricious monopoly but we have to look beyond the bricks and mortar to see who controls prices in the housing market.
Land Registry and ONS data show us:
Average UK house price has quadrupled in the last 29 years from £57,000 to more that £233,000.
Rate of increase in house prices has been positive for all but 68 of the last 348 months.
Between January 1996 and December 2007 the rate of increase was consistently positive, ranging between 2.1% and 28.4%.
Even in the last decade, after the financial crash of 2008/09, the rate of change has been positive apart from a minor dip in 2011/12.
These rates of increase represent a gargantuan amount of money. Where has it come from?
Our banking system has a monopoly on the creation of money in the form of debt and since deregulation in the 1980s it has been using this power with unrestrained gusto.
The inflation of house prices over the last three decades has been fuelled by mortgage lending, which continues apace.
At the end of 2019 the value of new mortgage commitments (lending agreed to be advanced in the coming months) was £70.6 billion, 4.0% higher than a year earlier.
The outstanding value of all residential mortgages at the end of 2019 was £1,499 billion, 3.8% higher than a year earlier.
To put £1,499 billion into perspective, the UK money supply (M4) at the end of 2019 was approximately £2,500 billion, which means that around 60% of the value of all of the money in the UK economy is owed in residential mortgage repayments.
Given the UK population’s addiction to the property market it is highly probable that a significant proportion of the additional disposable income from UBI will exacerbate the existing problem of house price inflation.
A proportion of the population in receipt of UBI will use the extra disposable income to invest in residential property – moving to a bigger/better home; buying a holiday home; investing in buy-to-let. Such investments will inevitably be geared – the spare UBI cash being multiplied threefold or more by mortgage providers.
The supply of residential property is limited by the number of people who want to move house and the number of new houses that are being built. Any increase in demand will certainly lead to an increase in asking prices.
Banks will happily respond by issuing mortgages that cover the inflated prices, encouraging more people with disposable UBI income to enter the market and contribute to further house price inflation. The more that banks lend – value and quantity – the more income they get from fees and interest.
The net result will be higher housing costs for everyone who rents or who has to move house due to a growing family or relocation.
But there will also be a negative effect on the rest of the economy. Money that could be used to support productive activity will be sucked into the coffers of mortgage providers and landlords and largely lost from general circulation.
For an economy to thrive money must be available and mobile. UBI is probably the best method of ensuring that a base load of money passes through every corner of the economy every month but its effectiveness will be severely compromised if a significant quantity of it is diverted into housing costs.
The continuous inflation of housing costs will also exert pressure to continuously increase the value of UBI payments which will create difficulties in the UBI funding mechanism.
If UBI is to work as its proponents imagine then there is a range of essential goods that will have to be protected from inadvertent or opportunistic price inflation. Housing is a prime candidate for such protection.
C --- New housing crisis causes WWIII
Liu 18
(Qian Liu, Economist based in China, From Economic Crisis to World War III, 8 November 2018, https://www.project-syndicate.org/commentary/economic-crisis-military-conflict-or-structural-reform-by-qian-liu-2018-11)
The next economic crisis is closer than you think. But what you should really worry about is what comes after: in the current social, political, and technological landscape, a prolonged economic crisis, combined with rising income inequality, could well escalate into a major global military conflict. The 2008-09 global financial crisis almost bankrupted governments and caused systemic collapse. Policymakers managed to pull the global economy back from the brink, using massive monetary stimulus, including quantitative easing and near-zero (or even negative) interest rates. But monetary stimulus is like an adrenaline shot to jump-start an arrested heart; it can revive the patient, but it does nothing to cure the disease. Treating a sick economy requires structural reforms, which can cover everything from financial and labor markets to tax systems, fertility patterns, and education policies.1 Policymakers have utterly failed to pursue such reforms, despite promising to do so. Instead, they have remained preoccupied with politics. From Italy to Germany, forming and sustaining governments now seems to take more time than actual governing. And Greece, for example, has relied on money from international creditors to keep its head (barely) above water, rather than genuinely reforming its pension system or improving its business environment. The lack of structural reform has meant that the unprecedented excess liquidity that central banks injected into their economies was not allocated to its most efficient uses. Instead, it raised global asset prices to levels even higher than those prevailing before 2008. In the United States, housing prices are now 8% higher than they were at the peak of the property bubble in 2006, according to the property website Zillow. The price-to-earnings (CAPE) ratio, which measures whether stock-market prices are within a reasonable range, is now higher than it was both in 2008 and at the start of the Great Depression in 1929. As monetary tightening reveals the vulnerabilities in the real economy, the collapse of asset-price bubbles will trigger another economic crisis – one that could be even more severe than the last, because we have built up a tolerance to our strongest macroeconomic medications. A decade of regular adrenaline shots, in the form of ultra-low interest rates and unconventional monetary policies, has severely depleted their power to stabilize and stimulate the economy. If history is any guide, the consequences of this mistake could extend far beyond the economy. According to Harvard’s Benjamin Friedman, prolonged periods of economic distress have been characterized also by public antipathy toward minority groups or foreign countries – attitudes that can help to fuel unrest, terrorism, or even war. For example, during the Great Depression, US President Herbert Hoover signed the 1930 Smoot-Hawley Tariff Act, intended to protect American workers and farmers from foreign competition. In the subsequent five years, global trade shrank by two-thirds. Within a decade, World War II had begun. To be sure, WWII, like World War I, was caused by a multitude of factors; there is no standard path to war. But there is reason to believe that high levels of inequality can play a significant role in stoking conflict.3 According to research by the economist Thomas Piketty, a spike in income inequality is often followed by a great crisis. Income inequality then declines for a while, before rising again, until a new peak – and a new disaster. Though causality has yet to be proven, given the limited number of data points, this correlation should not be taken lightly, especially with wealth and income inequality at historically high levels. This is all the more worrying in view of the numerous other factors stoking social unrest and diplomatic tension, including technological disruption, a record-breaking migration crisis, anxiety over globalization, political polarization, and rising nationalism. All are symptoms of failed policies that could turn out to be trigger points for a future crisis.
Uniqueness
UQ Wall --- stabilizing now
Housing prices are stabilizing now but there’s still uncertainty.
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/.
The housing market is always in flux, and predictions for the future can be challenging to make. However, experts are making some educated guesses about what we can expect in the coming years. Here's a look at some housing market predictions for 2023. According to a Forbes Advisor article, home prices are expected to continue to come down slowly, making it difficult for many homebuyers to access affordable housing.
However, the article notes that there may be some relief for buyers in the form of more inventory becoming available on the market. This may help to level out the playing field, making it easier for more people to find a home that they can afford. Another prediction from US News & World Report is that the housing market will experience a relatively shallow recession that stops and starts in 2023.
This prediction assumes that inflation will be under control by 2024, allowing mortgage rates to remain stable. In this scenario, home prices are expected to rise, but at a slower pace than they have been in recent years. Zillow also has some predictions for the housing market in 2023. One of the most positive is that housing affordability is expected to improve slightly. While high monthly mortgage costs and low inventory will continue to be a challenge, there are signs that conditions may stabilize.
This could be good news for first-time homebuyers, who have been struggling to find affordable homes in recent years. Another Zillow prediction is that home prices will continue to rise but at a slower pace. This could be due to a number of factors, including higher interest rates, more inventory becoming available on the market, and a slowdown in the rate of job growth. While this may make it more difficult for some buyers to afford a home, it could also make it easier for others to find a property that fits their budget.
House market is on track to stabilize---Biden’s Housing Supply Action Plan proves
White House, 22. 5-16-22. “President Biden Announces New Actions to Ease the Burden of Housing Costs.” whitehouse.gov/briefing-room/statements-releases/2022/05/16/president-biden-announces-new-actions-to-ease-the-burden-of-housing-costs/.
As President Biden said last week, tackling inflation is his top economic priority. Today, President Biden is releasing a Housing Supply Action Plan to ease the burden of housing costs over time, by boosting the supply of quality housing in every community. His plan includes legislative and administrative actions that will help close America’s housing supply shortfall in 5 years, starting with the creation and preservation of hundreds of thousands of affordable housing units in the next three years. When aligned with other policies to reduce housing costs and ensure affordability, such as rental assistance and downpayment assistance, closing the gap will mean more affordable rents and more attainable homeownership for Americans in every community. This is the most comprehensive all of government effort to close the housing supply shortfall in history.
The Plan will help renters who are struggling with high rental costs, with a particular focus on building and preserving rental housing for low- and moderate-income families. The Plan’s policies to boost supply are an important element of bringing homeownership within reach for Americans who, today, cannot find an affordable home because there are too few homes for sale in their communities. And it will help reduce price pressures in the economy, as housing costs make up about one-third of of the market basket for inflation, as measured by the Consumer Price Index.
Under the Plan, the Administration will:
Reward jurisdictions that have reformed zoning and land-use policies with higher scores in certain federal grant processes, for the first time at scale.
Deploy new financing mechanisms to build and preserve more housing where financing gaps currently exist: manufactured housing (including with chattel loans that the majority of manufactured housing purchasers rely on), accessory dwelling units (ADUs), 2-4 unit properties, and smaller multifamily buildings.
Expand and improve existing forms of federal financing, including for affordable multifamily development and preservation. This includes making Construction to Permanent loans (where one loan finances the construction but is also a long-term mortgage) more widely available by exploring the feasibility of Fannie Mae purchase of these loans; promoting the use of state, local, and Tribal government COVID-19 recovery funds to expand affordable housing supply; and announcing reforms to the Low Income Housing Tax Credit (LIHTC), which provides credits to private investors developing affordable rental housing, and the HOME Investment Partnerships Program (HOME), which provides grants to states and localities that communities use to fund a wide range of housing activities.
Ensure that more government-owned supply of homes and other housing goes to owners who will live in them – or non-profits who will rehab them – not large institutional investors.
Work with the private sector to address supply chain challenges and improve building techniques to finish construction in 2022 on the most new homes in any year since 2006.
Housing market is recovering now --- inflated prices are under control
Lambert and Wolf 6/22/23
(Zonda chief economist Ali Wolf, “The housing market recession is ‘over’ in the new-home space, top economist Ali Wolf says, but she’s hesitant on what comes next,” pg online @ https://fortune.com/2023/06/22/housing-market-recession-over-for-homebuilders-real-estate-outlook-2024/ //um-ef)
Back in September, Fed Chair Jerome Powell told reporters that the U.S. housing market was passing through a “difficult [housing] correction” that would restore “balance” to the market. At the time, new-home sales and existing home sales were falling fast as spiked mortgage rates created a buyer affordability shock. Things were even worse in Western housing markets, like Reno and Boise, where they had not only slipped into a housing recession—a sharp pullback in activity levels—but also full-blown home price corrections. Fast-forward to June 2023, and that so-called housing recession and housing correction looks long gone as resurgent 2023 buyer demand has translated into an uptick in everything from national home prices to new-home sales. Even Powell thinks the bottom is in. “We now see housing putting in a bottom, and maybe moving up a bit. We’re watching that situation carefully. I do think we’ll see rents and house prices filtering into housing services inflation [overall housing costs as tracked by the consumer price index], and I don’t see them coming up quickly. I see them wandering around at a low level,” Powell told reporters earlier this month. Are we in the early innings of a housing recovery? Does downside risk still remain? To better understand what’s going on in the housing market, Fortune reached out to Zonda chief economist Ali Wolf. When she’s not traveling around the country speaking to homebuilders, she’s advising the White House on housing matters. Below is Fortune’s Q&A with Ali Wolf. Fortune: Homebuilders have seen a significant improvement this spring. New-home sales are rising, and resale, or existing, inventory remains tight. Do builders expect the worst is behind them? It’s important to talk about where we are coming from to talk about where we are. Demand last year in many markets across the country slowed, with some markets feeling the cooling as early as March 2022 and others not until October or November. During the period, quick move-in home inventory—new homes that can be moved into within 90 days—started to build up. This made builders nervous that we had found the end of the housing market cycle, and they started to offer discounts and incentives to help move the product. At the same time, many made a decision to stop building more quick move-ins as standing inventory can be a liability when the market slows. What’s interesting is that we saw price elasticity play out in real time. Consumers returned to the market on the lower prices and incentives. This matched our consumer survey data at Zonda that showed the number one reason renters were renting was because they were “waiting for prices to come down.” The uptick in demand changed sentiment about the market. Instead of thinking the housing market was crashing, people started to see that there were deals available, which helped encourage those on the sidelines to reenter the market. The housing market in 2023 so far has far exceeded expectations. Builder sentiment has turned positive again. Builders are starting more homes and are enthusiastic about the demand pool. I’d say most are using the phrase “cautiously optimistic” [regarding] what the future holds. Some are still nervous about broader macro considerations, but many feel good that housing demand has held up despite 6.5% to 7.0% interest rates. It looks like mortgage rate buydowns, in particular, have helped builders “find the market” this spring. Given the sales improvement, could builders soon pull back on buydowns or incentives? Since the middle of last year, the majority of new-home communities have been o

Preview shortened. Download the file for the full document.