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» VISIT US ONLINE @ DSNEWS.COM 19 "LIKELY TO INTENSIFY" Warning signs are flashing in the housing market, says Lakshman Achuthan, COO and Co-Founder of the Economic Cycle Research Institute in New York. Achuthan recently published an article with Bloomberg in which he discussed the decline in growth in real home prices since the summer of 2018 began. is drop in home prices has been closely monitored across the industry, as seen in a recent report on the Redfin Housing Demand Index showing demand flat for a third consecutive month. Achuthan goes further, however, claiming research done at his institute indicates real home-price growth hasn't just declined in recent months but rather has "entered a cyclical downturn that is likely to intensify." is trend in declining home-price growth, he suggests, very well could lead to an actual drop in housing values, reversing significant gains made since housing prices plummeted in the wake of the subprime mortgage crisis. "With rates rising and the broader economy in a stealth slowdown that few recognize," Achuthan warns, "stock prices are vulnerable to corrections… In this context, the home-price downturn raises the risk of generalized asset-price deflation that could result in a negative wealth effect for the first time since the financial crisis." As underlying factors fueling this downturn, Achuthan points to forecasts in data which reveal a drop in housing starts and existing home sales. Another factor Achuthan cites for his belief that home prices have entered a cyclical decline is the affordability issue, which continues to be a serious problem for many potential homebuyers who feel locked out of the market. However, affordability is likely to persist as a dampener for home sales for the foreseen future—and will likely to be exacerbated by mortgage rates also widely expected to increase. Achuthan believes the increase in mortgage rates outpacing home prices combined with a paucity of new housing starts and rising costs in construction all together signal a real driver in a cyclical downturn in home prices across the nation. "If nothing else," Achuthan insists in closing, "the prospect of this scenario warrants serious monitoring." HUD LAUNCHES INTERNATIONAL PARTNERSHIP Pamela Hughes Patenaude, the Deputy Secretary of U.S. Housing and Urban Development (HUD), signed a Memorandum of Cooperation with Yitzhak Cohen, the Deputy Finance Minister of Israel. e stated goal of the memo is to increase collaboration between the U.S. and the State of Israel on a myriad of issues involving housing, community development, and mortgage finance. Both parties signed the memo in Jerusalem during a meeting of the U.S.- Israeli Joint Economic Development Group ( JEDG). Steven Mnuchin, the U.S. Treasury Secretary, headed the U.S. delegation. According to HUD's website, the memo establishes an open dialogue and exchange of information and research involving low- and moderate-income housing, mortgage and housing finance, management of public housing, and community development. Deputy Secretary Patenaude's trip to Israel and the signing of the memo are the culmination of much planning stemming from last year's JEDG meeting, which occurred in Washington, D.C. Patenaude will participate in a panel discussion on affordable housing with Zeey Bielski, the Head of the Israel Housing Administration, as well as take part in a roundtable hosted by the Urban Clinic at Hebrew University. Afterwards, she will tour an affordable housing development, as well as another development built to minimize damage from earthquakes. Neither site is specified in HUD's press release. "is cooperative agreement will serve as another building block in strengthening the close ties between our nations on a number of common issues that impact our citizens," said Patenaude. "We plan to share research and best practices for addressing the affordable housing challenges facing our nations. I am convinced that working together, we will be able to learn from each other to improve the lives of those we serve." "e Memorandum of Cooperation on housing is an opportunity to deepen the close ties between Israel and the United States on an important issue that preoccupies both countries," said Cohen. "Israel and the United States are facing very different housing challenges, but we can learn from these differences and cooperate on sharing acquired knowledge for the benefit of the next generations." According to the memorandum itself, the pledge "is an expression of intent only and does not obligate funds, personnel, services, or other resources of either Participant, nor does it create any binding obligations under international or domestic law." Nevertheless, the memo reads, the "Participants may contract out the research work partially or entirely to outside entities and/or researchers with the consent of both Participants."

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