KeNo's Housing and Economic Portal: Wednesday June 17 Housing and Economic stories

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New Housing Headwind Looms as Fewer Renters Can Afford to Own - (online.wsj.com) Last decade’s housing crisis could give way to a new one in which many families lack the incomes or savings needed to buy homes, creating a surge of renters and a shortage of affordable housing. The latest problem looks very different from the subprime mania of the early 2000s, but it shares one trait: Policy makers in Washington appear either unaware or unwilling to do much about it. The U.S. homeownership rate is below where it stood 20 years ago when President Bill Clinton launched a national campaign to encourage Americans to buy homes. Conventional wisdom says the rate, at 63.7%, is leveling off to where it was for decades before the housing-market peak. But this is probably wrong, according to research from the Urban Institute, which predicts homeownership will continue to slip for at least 15 years.

Chinese Defer Car Purchases to Chase Stock Rally - (www.bloomberg.com) The stockbroker is beating the car salesman in the battle for Chinese wallets. With China’s stock market more than doubling in the past year, consumers like Tom Zhang are deferring big-ticket purchases to chase the rally. The Beijing resident was deciding between a Buick and a Volkswagen Passat before concluding his 300,000 yuan ($48,000) would be better off in equities. He was right, as his holdings soared to 800,000 yuan in value in little more than a year. “I feel like I am good at this, that I can make more,” Zhang, 26, said as he left a branch of Qilu Securities Co. in Beijing. “Why would I kill the hen when there are more eggs on the way? I can always buy my car later.” Investors have opened almost as many stock accounts this year through May 22 as in the previous four years combined. The stampede into equities is the latest factor slowing auto demand in the world’s largest market, where sales last month rose at the slowest pace in more than two years.

Bond-Market Game of Chicken With Fed Is More Dangerous Than Ever - (www.bloomberg.com) If the Federal Reserve is really so intent on raising interest rates this year, why is Wall Street chopping its forecasts for bond yields? For all the hand-wringing over the recent selloff that wiped out about $1.2 trillion in value from the global bond market, the fixed-income market’s best and brightest have actually taken down their year-end estimates for Treasuries in four of the past five months. It amounts to a dangerous game of chicken, in which many analysts and investors are betting the Fed won’t lift rates too fast because of the damage it may inflict on the economy -- even after last week’s stronger-than-expected jobs report. And the stakes have never been higher for holders of debt globally, who are more exposed to the potential for big losses than at any time in history, based on a metric known as duration.

If You Think Greece’s Crisis Will End Any Time Soon, Think Again - (www.bloomberg.com) Frustrated by Greece’s cat and mouse game with its creditors? Get used to it. Even if Prime Minister Alexis Tsipras clinches as much as 7.2 billion euros ($8 billion) from a bailout tranche creditors are withholding, he’s going to need another cash infusion shortly thereafter. What will ensue is a renewed battle after almost five months of trench warfare. The beleaguered country requires a third bailout of about 30 billion euros, according to Nomura International Plc analysts Lefteris Farmakis and Dimitris Drakopoulos. The final bill will depend on whether fellow euro member states grant Greece any debt relief, and what form that relief would take, they said. Tsipras says any aid must be on his terms rather than those of governments whose taxpayers have forked out billions in the past five years to keep Greece in the euro. The standoff has triggered an unprecedented liquidity squeeze, pushing the country’s economy back into recession, and thus raising the total sum of additional loans Greece may need after its current euro-area-backed bailout expires this month.

Ringgit Slumps to Nine-Year Low as Funds Exit on Fed Rate Bets - (www.bloomberg.com) The ringgit (Malaysian currency) slid to a nine-year low after a U.S. jobs report beat forecasts, backing the case for the Federal Reserve to start tightening monetary policy as money flows out of Malaysian stocks. The dollar rose against 13 of the world’s 16 major currencies on Friday after data showed U.S. employers created 280,000 positions in May, the most in five months and exceeding the median estimate in a Bloomberg survey for a 226,000 gain. Malaysian exports contracted in April for a third month this year, and the trade surplus narrowed, figures showed last week. Overseas investors sold more of the nation’s equities than they bought in May, taking out the most funds of any month this year.

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