Both news and comments about housing will take a back seat this week to the debt ceiling and deficit talks in the US and on-going worries about national debts in Europe. It’s not that no one cares about housing any more — although there may be a limit to how much accumulated bad news people can handle — it’s that there are other events crowding out home prices, housing starts and worries about where to live. The brinkmanship of the U.S. debt ceiling discussions is likely to continue to the very last minute. In the same way that labor negotiations don’t really begin until they stop the clock at 11:59 PM for a midnight contract expiration, the debt ceiling discussion is only beginning to get serious. One by-product is likely to be volatility and gyrations in the stock and bond markets. This is one time when we can be thankful that housing markets move at a much slower pace than the financial markets. Imagine the turmoil one could have if one could trade homes in seconds and minutes and settle — close — the trade within three days.
For most of the housing market, Greece, Portugal, European debt and the future of the euro all don’t make much of a difference. But there are some spots where all that does matter for housing. With the dollar’s decline and the long term view that America is a safe place to store wealth for those living in other parts of the world, the high end of the housing market can be very attractive. While statistics of how many seven- and eight-figure Manhattan apartments are owned by foreign out-of-towners are hard to come by, a recent report in the New York Times suggest there are a lot of them.