66 Finance & economics TheEconomistMay28th 2022
roughly the same share as the current ipef
partners. Most crucially, China is still ex
cluded. The ipef, like the tpp, is an at
tempt to build a trading structure in Asia
that enshrines both America’s economic
principles and its economic power—wel
comed by many in the region as a counter
balance to China’s heft.
That, however, is where the similarities
end. Mr Trump’s success in winning sup
port with his calls to stop countries “rip
ping off” America has made many in Wash
ington leery of ambitious freetrade deals.
So rather than starting work on a pact that
would require approval from Congress, Mr
Biden’s team has designed a framework
that is more malleable and may avoid that
political deathtrap. In announcing the
launch, Katherine Tai, the United States
Trade Representative (ustr), pledged to
“keep Congress close” in shaping the
ipef—a far cry from putting it to a vote.
Malleability has a few big downsides. It
limits what America can offer. A cut in ta
riff rates, a plank of most freetrade deals,
is a nonstarter because it would require
congressional support. America still vows
to push for strong labour and environmen
tal standards but, unable to offer more ac
cess to its vast market, it lacks a key bar
gaining chip. The durability of the ipefis
also in doubt. Were Mr Trump to return to
the Oval Office in 2024, he would not need
three days to ditch the framework.
The Biden administration has tried to
make a virtue of these limits. Rather than
conceiving of the ipefas a conventional
deal, it has declared that the pact will rest
on four pillars, with trade promotion just
one. The other three goals are to make sup
ply chains more resilient; to promote in
frastructure investment and clean energy;
and to form new rules on taxation and
anticorruption. It is tempting to dismiss
such a wideranging agenda as too vague to
amount to anything. But paradoxically, a
nearstumbleatthelaunchoftheframe
work illustratedthatitcould,intheory,
haveforcetoitscontents:Americahadto
tone downthelanguageinitsfounding
documents,otherwisesomeinAsiawould
havebalkedatsigningthem.
MatthewGoodman oftheCentre for
Strategic and International Studies, a
thinktank, notesthatthefocusontopics
suchasdigitaltrade,competitionpolicy
andbriberymakesfora goodmenuforthe
ipef. “Theseareissuesthatareverymuch
intheinterestofourpartnersinthere
gion,”hesays.Atthesametime,breadth
posesachallenge.Insteadofjusthaving
theustrastheleadnegotiator,asinnor
maltradetalks,theCommerceDepartment
isinchargeofthenontradeportfolio.That
risksturningit intoa multiheadedbeast.
Fornow,manyintheregionaremost
pleased by the symbolism.The wounds
fromAmerica’stppexitarestillraw.Since
Mr Biden’s election victory, allies have
waitedandwaitedforAmericatodevisea
newAsiantradestrategy.Atlastithasar
rived,evenif it ismorenotableforitspolit
icalconstraintsthanitseconomicpoten
tial.“Wearejusthappytohavethematthe
table,”saysoneAustralianofficial.n
Housingmarkets
Home run
S
pring weatheroftenbringsastam
pede of homebuyers. Blossoming flow
ers and gushing sunlight after the winter
slog make homes look more inviting. Not
this year, though. Across the rich world
househunters perturbed by high prices
and rising rates are holding fire on mort
gage applications. In America new home
sales have crashed to twoyear lows.
One group of buyers, however, remains
unfazed: Wall Street. What began as an
opportunistic bet on singlefamily hous
ing during America’s subprime crash of
200710 has morphed into a mainstream
asset class. Today all sorts of institutions—
from privateequity firms to insurers and
pension funds—are piling into the sector.
They are unlikely to vacate it: being a ren
tier looks as appealing as ever.
One reason is that demand for rental
homes will jump as home ownership gets
costlier. American savers need on average
$15,000 more than they did before the pan
demic to afford a 10% downpayment.
Higher borrowing costs are forcing millen
nials nearing their peak buying years into
longer leases. This coincides with a larger
trendfuelledbycovid19:a shiftfromflats
towards suburban homes with gardens
andofficespace—whichmanyhouseholds
cannotaffordandmustthereforerent.
Ascarcityofhousingwillalsohelpthe
rentiers.Despitea recentsurgeininvest
ment, themarketforsinglefamilyhomes
remainswoefullyundersupplied.America
isshortmorethan5mhomesforbuyers
andrenters. England has more than 28
prospective tenants for every available
property. Big institutions are building
their wayout of constrainedsupply. In
America,morethanoneinfournewprop
ertiesadded to the portfolios ofsingle
familyrentalprovidersinthefinalquarter
of 2021 werebuiltratherthanbought. In
Britain,investorsareprojectedtosupplya
tenthofthegovernment’stargetfornew
housinginthenextfewyears.
This helps explain thesector’s resil
ience.Whilelandlordsofshops,barsand
restaurantsstruggledtocollectpayments
atthestartofthepandemic,strong de
mand for singlefamily homes pushed
rentsthroughtheroof.InAmerica,they
roseby13%inthe 12 monthstoMarch2022.
InMiami,theyjumpedbymorethan40%.
Rentshelduprelatively wellduringthe
globalfinancial crisis; in somemarkets
theyevengrew(seechart).Thatishelping
toreassureinvestorsasa recessionlooms.
Therearerisks.Assetpriceswillbesen
sitivetohigherrates,particularlyifinfla
tionstayshigh.Yetitisthesmallestland
lords,withfivehomesorfewer,wholook
mostexposed.Theyownnearlynineinten
singlefamily rental homes in America.
JohnBurnsRealEstateConsulting,are
search firm, reckons smaller investors
bought28%ofallhomessoldinthecoun
tryduringthefirstquarterof2022,com
pared with 6% for investorswith more
thantenhomes.AsWallStreet’shomerun
continues,itisthelesserlandlordswho
havetheirbackstothewall.n
Wall Street’s housing grab continues
Safe-ish as houses
United States, Burns single-family rent index
% change following the Great Recession*
Source:John Burns Real Estate Consulting
*Effectiverent for new leases from peak to trough (2007-2)
Phoenix
Atlanta
Tampa
Dallas
Nashville
Salt Lake City
Miami
Denver
San Antonio
Columbus
Cincinnati
Indianapolis
Chicago
Houston
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