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00:00Now you see the housing market slowing down because you see higher rates are having an effect that should have an effect on housing prices perhaps even fairly quickly so that prices won't necessarily come down. But price increases will flatten out. We're seeing lower home sales we're seeing lower starts. So we're seeing a slowing in housing. This is Bloomberg Markets. I'm creating Gupta with John Erlich. When you were just as the Fed chair Jay Powell testifying earlier today before the Senate Banking Committee. And the U.S. isn't the only country seeing signs of a housing slowdown. He says the topic of today's big take. Joining us now to break it all down is the Elaina Charlotte of our senior U.S. economist for Bloomberg Economics. Elaine thank you as always for joining us. This is a conversation we've had in the markets for some time now being priced. And you also had a Bloomberg scoop I should add that hundreds are being cut or reassigned in JP Morgan's mortgage unit as housing demand begins slumping during this rate sir. So you can really see the effects across really all parts of both the market and the economy. But I have to ask the faster the deceleration that you're seeing what are the ripple effects they're going to see across the US economy in particular. Well I think the U.S. economy's pretty much insulated from a full blown housing crisis akin to what we saw back in 2000 7. I think it's just the thing is that real estate if you look at that homeownership within real estate is at the highest level since 1980s. You look at debt service ratios they're at the lowest levels. So you know households have delivered quite a lot. So the risks to the financial system from the housing market are pretty low at this point. Of course housing will slow down and it will have some spillover effects on consumption and so on. But that's the whole idea of slowing demand by raising interest rates or raising interest rates as Chip also mentioned today. Union interesting to hear you say that echoing some of what we just heard from Megan GREENE of Harvard as we look at some of these lovely U.S. housing markets around the world based on the economics work that Bloomberg has done whether it's New Zealand or Australia or here in Canada where over the last couple of years it has not been surprising. And somehow home markets to see prices increased by more than 50 percent. You know there was a trend that started going back to the financial crisis were more conservative Canadians who managed on the economic front and then saw record low interest rates for basically a decade started to get in. So could we be in a situation where the U.S. navigates relatively well but has to be keeping an eye on these global housing markets because of this uncertainty. Absolutely. I think yes you're right. Canada is among those countries that potentially see the highest risks according to the analysis that was performed by my colleague Ross Shaw at Bloomberg Economics. I think the U.S. is relatively safe in this environment. And again because I think the U.S. consumer has delivered quite a bit relative to what we saw back in the early 2000s. So I think that is a really important distinction here. Also the U.S. consumer has accumulated a lot of savings and those excess savings will provide some caution despite the fact that the savings rate in the U.S. has fallen quite a bit since the peak we saw back during the crisis line about 30 seconds here. I have to ask simply about whether or not we actually see a housing shortage continue because not just about crimping demands on the supply side as well. How long does the housing shortage. Well I think the supply being short will support housing prices to a certain extent this year because there's a lot of housing in the pipeline. But those houses cannot be finished simply because they endorse windows you know sinks whatever because of supply shortages. So we will not see a significant improvement on the supply side which should probably prevent housing prices from going down this year at least.

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Housing Markets Are Bubbling All Over the World

A world economy already contending with raging inflation, stock-market turmoil and a grueling war is facing yet another threat: the unraveling of a massive housing boom. Yelena Shulyatyeva of Bloomberg Economics is on "Bloomberg Markets" with The Big Take. (Source: Bloomberg)

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