No one knows what vulnerabilities that lurk in the economy will bite us when a recession comes. One big worry is the housing market, it caused the last financial crisis and has a big impact on household wealth. Rising interest rates and economic concerns tend to cool housing demand. The figure from the OECD shows house prices are cratering in some countries. It is notable prices have not decreased as much in Spain (their market was hard hit in 2008) and in the US. The US may be escaping some of the fall because its government promotes wide-spread access to 30-year fixed rate mortgages that don't exist in other countries. After years of low rates Americans aren't moving. Canada's economy is especially vulnerable because it is more sensitive to rising rates and it experienced very large increases in real estate prices the last decade.
Source: OECD Data
Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.
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