Here's Housing's Real Threat to the Economy
Tight urban supply is a bigger long-term problem than slow sales.
It’s different this time.
Photographer: Justin Sullivan/Getty Images North AmericaA decade after America’s housing market wrecked finance, it’s in trouble again. The good news is it won’t poison all the world’s economies at once this time. The bad news is its structural problems are slowly poisoning the U.S. economy.
Home sales have been wobbly lately, thanks mainly to higher mortgage rates. And the new law limiting SALT deductions – part of last year’s tax-cut bill – is particularly hurting sales in the Northeast. But the U.S. economy is much better prepared for this housing slump than in 2007, writes Conor Sen. Lending standards are higher and home supply is much tighter, Conor notes, suggesting this downturn will look more like 1994’s than 2007’s.