First there was a crisis and then there was no crisis. Then there is.

We seem to be at a weird point, a turning of the tide.

For months now there has been a trumpeting by the mainstream media about the spiraling cost of housing and rising rental rates.  And that has indeed been real.  Housing prices rose as did cost of rentals.

But that was not ever particularly much the focus of the conversation.  Among the chattering class (academics, advocacy, journalists, etc.), everyone wanted to talk about the need for government to institute rental controls.  There was chastisement of the  deep evil of people living in single family residences.  Of the heinous NIMBY people.  Of the importance to build more housing (especially dense housing, preferably multi-unit housing).  Of the desire to fundamentally remake urban spaces into dense walking environments.

There was even a lot of talk about a mythical YIMBY (Yes in my backyard) movement.  As far as I can tell no actual long-term property owners were involved.  The most strident YIMBYs seemed to be renters, people not living in the jurisdiction, or people who demonstrated no long term commitment to the neighborhoods.  

There was even, sotto voce, some occasional discussion about the need to reform the construction permitting process in cities.  While clearly a mechanism of great government control, it is also enormously expensive and time consuming.  The most expensive cities also have the most complex zoning processes.  Expensive and time consuming construction permitting means homes and multi-unit residences are going to be more expensive.  

Basically, the statists wanted to institute more regulation and get government more involved in housing construction.  Never a solution with material benefits.

The tide of statist authoritarianism came sweeping in.  

And part of this was all just noise in the system.  Closing the economy for a couple of years caused massive population movements out of cities into suburbs and small towns.  As the cities opened up again, there was two-year postponed demand to get through, complicated by no one having a clear visibility as to the nature of post-covid work patterns.  Will people continue to stay away from cities?  Will companies let people work more from home?  How will demand for property in cities be affected by the dramatic increase in crime and violence in cities over the past two years.   

We simply don't know but there are a lot of people out there whose lives have been on hold and their demand pent up.  That demand and the associated population movements have caused very local property cost effects, primarily in select big cities.  

Now, there is the countervailing tide.  With inflation up, real incomes down, mortgage costs shooting up, demand seems to be dramatically weakening.  Housing sales are down.  Unit prices are down.  Rentals don't seem to be coming down yet but that likely may be a matter of time.

Six months ago all the headlines were about the shortage of housing and the drastic political interventions needed to address that.

Now I am beginning to see the opposite headlines - sales are crashing, property market is weak, prices are falling, demand is uncertain.  In another couple of months will this then be the crisis de jour?

The attempt to make the normal adjustment to a market disruption (demand for properties changed under lockdowns) into a crisis is now being mirrored by an effort to make that adjustment (weakening demand) also into a crisis.

Mainstream media is in the business of selling crises because that is when power can be seized and when money can be made.  We have bad macro economic policies which are driving a lot of negative macro-economy outcomes and we have a lot of demand sensitivity owing to lockdowns and to some smaller degree to housing stock inventory.

In terms of real estate though, there is no crisis.  Just market adjustments which will play out along roughly anticipated lines over the next twelve months.  No need to fundamentally transform the economy of interject government into the process.  Everything reverts to mean.