It shouldn’t surprise anyone that migrants want to go to areas that already have a strong economy and plenty of opportunity. The very same places that many other people want to move to.
Global Migration Boom Keeps Housing Costs High
Surging immigration is boosting rents and supporting home prices, complicating inflation flight
By
Stuart Condie, The Wall Street Journal, July 15, 2023
A wave of immigration to affluent countries is adding upward pressure to housing costs, frustrating renters and home buyers and making it harder for central bankers to tame inflation.
From Europe to Asia and North America, people have been moving across borders in record numbers, lured by tight labor markets and looser post-Covid travel rules. Many are landing in cities where housing is in short supply.
That is helping push up rents and keep home prices from falling as much as expected despite sharp increases in borrowing costs, especially in Europe, Canada and Australia…
In the U.S., rent growth is slowing, but home prices have started rising again after falling over the past year. … Rent and housing costs continue to be a driver of inflation in the U.S., accounting for 70% of the 0.2% increase in consumer prices during June… [end quote]
From Europe to Asia and North America, people have been moving across borders in record numbers, lured by tight labor markets and looser post-Covid travel rules. Many are landing in cities where housing is in short supply.
The situation in North America might have slightly different drivers but the main driver in Europe and Asia isn’t the lure of tight labor markets in western economies or a sudden urge for recreational travel after covid. It’s the war in Ukraine. Over eight million Ukrainians have been displaced into countries such as Poland, Germany, USA, Czech Republic, Italy, Canada, Spain and Israel. The war has also caused an estimated 900,000 RUSSIANS to flee Russia to escape being drafted into the war or flee the related political oppression.
Even if the war in Ukraine ended today, so much of Ukraine’s civilian infrastructure (public works, energy plants, government buildings, housing stock) has been destroyed, it will take a twenty-first century equivalent of the Marshall Plan to rebuild enough of the damage to start the virtuous circle to allow enough Ukrainians to return to finish the work via normal market mechanisms. I’m not saying the United States should foot that bill alone or even the majority of it. I’m saying all nations – and certainly the western democracies – have an incentive to contribute to the rebuilding needed in Ukraine. The motivations have nothing to do with altruistic goals towards the people of Ukraine (who have obviously suffered enormously). The motivations are more self-centered.
The economic pressures imposed by Ukrainian refugees in some of these countries are immense. I am still amazed at how gracious some of these host countries continue to be given the square wave jump in costs imposed on individual families acting as extended free bed & breakfasts for refugees. However, at a larger societal level, those stresses cannot be absorbed indefinitely without being relieved or causing the stress to morph into uglier nativist / nationalist political strife. Fewer people will be worried about tourism revenue or sales of the next iPhone if labor strikes and immigration protests are causing riots in the streets.
In some sense, the world economy is doing INCREDIBLY well, given the unfathomable, needless destruction being inflicted upon it and the deeper, more subliminal forces of conflict that have yet to be voiced, much less addressed.
Migration, product, demand are fed by loose monetary policies.
You can not grow your economy by one dollar without at least printing $1 more than you had previously.
Covid caused printing in the developed world.
When we look at employment to size up a coming recession and rate hikes we are off the mark. Asset prices are more important. Asset prices are the wealth effect. This is pent up monetary policy on demand…on inflationary forces. While we are missing the deflationary pressures of Chinese economies of scale, gone.
The FED’s job now after Covid is to crash the commercial real estate markets to take down the wealth effect where it does not belong.