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Housing Crises Go Global: The Boom, the Bust, and Beyond

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The authors discuss how public and private investment trends and financial innovations can find scalable solutions to global shelter needs.
This chapter is from the book

Global Housing Crisis and the Demand for Shelter Capital

Rapid population growth and urbanization accompanied by a global housing crisis are creating massive shelter poverty in an era of financial chaos and emerging social and political instability. The shelter crises are more visible than ever as rural areas empty and megacities abound with unregulated housing districts circling urban cores.

In many developing world capitals, more than half of the housing stock is informal or squatter settlements without clear property rights or access to capital for housing or home improvements. Slums are the fastest-growing housing stock in the world (25% annually). According to United Nations statistics, more than 1.6 billion people live in substandard housing (32% of the global urban population), and that will exceed 2 billion over the next ten years without major new solutions.1

In the face of this, the United Nations Millennium Development goals call for a significant improvement in the lives of at least 100 million slum dwellers by 2020. If that goal is considered a victory for international housing policy efforts, you would have to wonder what a surrender would look like. This book explores how public and private investment trends and financial innovations can find scalable solutions to these global shelter needs.

In this context, the litany of data documenting housing dislocation grows daily. Housing markets are teetering in the U.S. and around the world. Financial crises have compounded the shelter problems in Greece, Spain, Italy, Ireland, Portugal, and other countries.2 Homebuilder sentiment remains at a historical low point as borrowers face difficulty getting mortgages from wary banks. The number of lenders seizing properties broke records in 2011. The bloated supply of unsold homes lingers, with ownerless houses at their highest since records have been kept. Foreclosure rates continue to soar.

Among 39 countries surveyed on house prices, 26 recorded price drops and 18 experienced accelerating rates of decline that are closely related to burgeoning debt and financial crises worldwide.3 The shadow of falling home prices is accompanied by a decrease in consumption spending, low consumer and producer confidence, an ongoing credit crunch, and worsening unemployment.

In this book, we look beyond the booms, bubbles, and inevitable busts of real estate markets to examine prospective solutions to finance housing’s future. Always, though, before moving forward, we have to understand the past.

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