Tag Archives: Residential Building Construction

China’s Covid Protests Began With an Apartment Fire in a Remote Region

As smoke crept through the 21-story apartment building in far western China, panicked messages filled the residents’ chat group. “On the 16th floor, we don’t have enough oxygen,” a woman gasped in an audio message. “Soon our children won’t be OK.”

Another person added a plea about the people in apartment 1901: “They wouldn’t be able to open the door. Can you break into it and take a look? There are many children inside.”

Many who heard the reports were shocked, not by a tragedy in the remote city of Urumqi, but because it had taken firefighters three hours to control the fire. People across the country believed the delays happened in part because of the pandemic restrictions that have been a running source of discontent throughout the country. The impact has reached into the heart of Chinese politics.

Excerpts of residents’ panicked conversation began to circulate on social media, along with videos of the emergency response. They showed fire crews struggling to get around barriers to approach the building. Videos showed fire crews’ water streams falling short of the fire as its flames slithered toward the top of the apartment tower.

Pandemic controls imposed by Chinese authorities around, and possibly inside, the apartment building had delayed the fire response, neighbors and family members of those killed have said. That would mean that the death toll, which many believed was much higher than the official tally of 10, was ultimately in part a product of China’s strict, already widely detested zero-tolerance Covid policy. The government denies all that.

Outrage spilled onto the streets of Urumqi, the capital of the heavily Muslim Chinese region of Xinjiang, where residents had been locked down for more than 100 days. Footage of the fire and the protest in Urumqi spread on Chinese social media and on the popular do-everything app

WeChat.

Firefighters sprayed water on a residential-building fire in the city of Urumqi that killed 10 and triggered protests against Covid-19 lockdowns.



Photo:

Associated Press

To large numbers of Chinese people who have had the experience of being locked inside their own apartments because of Covid controls, the words and images flowing out of Xinjiang conjured a scenario that seemed terrifyingly plausible.

“The 100-plus day lockdown is real. The many deaths from Covid controls are real. Discontent has accumulated and is destined to erupt,” said a user on the Twitter-like

Weibo

platform in one widely endorsed comment about the fire.

Within days, the protest would spread throughout China, growing into the largest show of public defiance the Communist Party has faced since the 1989 pro-democracy protests at Tiananmen Square. The demonstrations have posed a rare challenge to the recently extended rule of Chinese leader

Xi Jinping,

compounding the government’s challenges over how to ease its Covid restrictions.

Large protests erupted across China as crowds voiced their frustration at nearly three years of Covid-19 controls. Here’s how a deadly fire in Xinjiang sparked domestic upheaval and a political dilemma for Xi Jinping’s leadership. Photo: Thomas Peter/Reuters

China has experienced public outrage over its strict Covid-19 restrictions before, most of which the authorities had managed to contain online. Going back nearly three years, the death from the coronavirus of Li Wenliang, a doctor who was punished for warning others about the initial outbreak in Wuhan, unleashed a flood of grief and anger.

This September, a bus crash in Guizhou province that killed 27 people who were being sent to quarantine in the middle of the night raised an outcry about steps taken to control the coronavirus.

Mourners in Hong Kong paid their respects in February 2020 to Chinese physician Li Wenliang. Dr. Li raised early alarms about the coronavirus outbreak in Wuhan but was silenced by police, only to die of the disease himself.



Photo:

jerome favre/EPA/Shutterstock

More recently, after an announcement that Covid restrictions would be eased led to little actual change, public frustration spilled out onto the streets. Workers at

Foxconn Technology Group’s

main plant in the city of Zhengzhou, the world’s largest iPhone factory, clashed with police while protesting a contract dispute with roots in pandemic lockdowns. In some Beijing neighborhoods, people argued with officials over the legality of controls.

In maintaining the lockdowns in Xinjiang, local authorities have been able to rely on the country’s most advanced and suffocating security apparatus, originally built to carry out a campaign of ethnic re-engineering against the region’s 14 million Uyghurs and other Turkic Muslims.

Most if not all of the fire’s victims belonged to these groups, according to relatives and overseas Uyghur activists. Discrimination by China’s Han majority against Turkic minorities has long fueled ethnic tensions in the region, which exploded into deadly race riots in Urumqi in 2009.

Yet in the past week, the sides found common cause, at least temporarily, in anger over the fire.

According to an official account published in the state-run Xinjiang Daily newspaper, the blaze began on the 15th floor, in the apartment of a Uyghur woman who was having a bath in a home spa when a circuit breaker flipped. She flipped it back, then was alerted by her daughter to the smell of smoke. When she re-emerged from the bathroom, flames had risen to the wooden ceiling from the bed.

A community worker arrived just as they were fleeing the flames, according to Xinjiang Daily. He called the fire service at 7:49 p.m. last Thursday, then helped rush the pair and their neighbors downstairs.

A still taken from a social media video shows a fire truck shooting water at the burning residential building in Urumqi. The fire and delays in fighting it proved a catalyst for nationwide protests against Covid-19 lockdowns.



Photo:

REUTERS

At the ground level, burning debris had begun falling over the doorway. Those who couldn’t leave through the front gate in time had to climb out of a window from an apartment, the newspaper reported.

Firefighters didn’t reach some of the apartments until around 90 minutes after they were called, according to posts on the chat group.

Video footage showed that traffic-control structures had to be removed as a line of fire trucks waited, causing delays. The government denied the structures had been installed for pandemic-control reasons.

At a press briefing convened late Friday night as protests unfolded, officials said that three fire trucks from a nearby station arrived at the scene five minutes after the fire was reported, but they were blocked by cars that had to be moved.

On social media, residents said those cars had been parked there for months during the fall Covid lockdown, and the engines couldn’t start.

Li Wensheng, Urumqi’s fire chief, said at the press briefing that some residents’ “self-rescue abilities were weak,” a comment that added to the simmering anger.

The Xinjiang and Urumqi governments didn’t respond to requests for comment.

Han residents of Urumqi led the protests that unfolded in the freezing night air the day following the fire. Uyghur residents have faced the strictest lockdowns and largely stayed home out of fear they would bear the brunt of any reprisals, overseas activists said.

Demonstrations were fueled by the group chat conversations and footage of obstructed fire trucks, as well as by videos circulating online that appeared to capture the screams of people from the smoldering building. “Open the gate!” one woman could be heard shouting in horror in one video.

On Saturday night, several female students stood for hours on the campus of Communication University of China in Nanjing, holding blank sheets of paper in silence, widely taken to be a reference to Chinese censorship. A male student from Xinjiang offered a tribute to the victims in Urumqi and to “all other victims nationwide,” saying he had been a coward for too long.

A man was arrested on a Shanghai street when protests erupted following a deadly apartment-building fire in China’s Xinjiang region.



Photo:

hector retamal/AFP/Getty Images

That same night, dozens of people in Shanghai gathered for a vigil with flowers and candles near a street named after Urumqi. Passersby joined in, and the crowd grew into the hundreds. Just past midnight, some demonstrators began chanting for Mr. Xi to step down.

Similar protests emerged in half a dozen Chinese cities and more than a dozen university campuses in the following days. In several instances, demonstrators chanted “We are all Xinjiang people.” Others called for democracy and free speech.

Chinese authorities have devoted enormous resources to building domestic security and surveillance systems specifically designed to prevent such wide and unified outbreaks of dissent. While protests aren’t uncommon, scholars who study China say they are almost always local events with little capacity to spread.

The Cyberspace Administration of China issued guidance to companies on Tuesday, including Tencent Holdings Ltd. and ByteDance Ltd., the Chinese owner of short video apps TikTok and Douyin, asking them to add more staff to internet censorship teams, according to people familiar with the matter. The companies were also asked to pay more attention to content related to the protests, particularly any information being shared about demonstrations at Chinese universities and the fire.

In imposing its stringent Covid controls, human-rights activists and other observers say, the Communist Party created an issue that China’s citizens only have to look out their front door to understand. Some Uyghurs affected by the fire said the fear and frustration stemming from pandemic controls crossed deep-seated ethnic divides.

Marhaba Muhammad, now a resident of Turkey, said she read news of the fire with a sense of horror. She recognized the building as the home of her aunt, whom she last visited in 2016, shortly before leaving China. The family lived in apartment 1901, the subject of one of the desperate messages left in the residents’ chat group.

Ms. Muhammad said she and her family abroad learned that the aunt, Qemernisahan Abdurahman, 48, had died in the apartment, along with four children age 5 to 13.

Ms. Abdurahman’s husband wasn’t there. He and an elder son were detained as part of the crackdown in Xinjiang in 2017 and now are imprisoned, said Ms. Muhammad and her brother, Abdulhafiz Maiamaitimin, who lives in Switzerland.

“This news is so painful. No one imagined,” she said.

Qemernisahan Abdurahman, 48, with 3 of her four children who died in the fire in Urumqi.



Photo:

Marhaba Muhammad

In apartment 1801, directly below where Ms. Muhammad’s aunt and children died, a woman also died along with her children, according to Abduweli Ayup, a Uyghur activist in Norway who spoke with relatives and neighbors of the fire victims.

Han Chinese don’t have to fear the level of oppression faced by Uyghurs, Ms. Muhammad said, referring to the Chinese government’s detention of upwards of a million Uyghurs and other Turkic Muslims in internment camps and prisons—a practice the United Nations has said may constitute a crime against humanity.

Yet “after the fire, they realized that Uyghurs today would be the Chinese tomorrow,” she said.

Police have targeted protest participants by using some of the surveillance techniques honed in Xinjiang to target Uyghurs. In chat rooms used to organize demonstrations, protesters have reported police scanning the smartphones of pedestrians for overseas apps such as Twitter and Telegram, a common experience on the streets of Urumqi.

A lawyer representing more than a dozen protesters taken by police said she believes many of her clients were tracked through mobile-phone data, another echo of the Uyghur experience in Xinjiang.

On Tuesday, Chinese-Australian activist and cartoonist Badiucao, who goes by one name, reposted a widely shared video of police on the Shanghai subway checking the phones of passengers on Twitter. He appended a single phrase: “Xinjiang-ization.”

Protesters in Beijing lighted candles during a protest against China’s strict zero-Covid measures.



Photo:

Kevin Frayer/Getty Images

Write to Austin Ramzy at austin.ramzy@wsj.com and to Wenxin Fan at Wenxin.Fan@wsj.com

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China Dials Back Property Restrictions in Bid to Reverse Economic Slide

For much of the past year, China’s economy has been reeling under Xi Jinping’s dual campaigns to rein in soaring property prices and to stamp out any traces of Covid-19 within the country’s borders.

Now, as he moves to loosen pandemic restrictions, China’s leader, Mr. Xi, is signaling a reversal of his real estate crackdown, too, a tacit acknowledgment of the economic pain and public frustration that the two policies have engendered.

China’s central bank and top banking regulator issued a wide-ranging series of measures aimed at bolstering housing demand and supply, according to a notice circulated on Friday to the country’s financial institutions and officials involved in policy-making. The authenticity of the document was confirmed by people close to the central bank.

The new policies, which were signed off on by Mr. Xi, according to the officials involved in policy-making, unwind some of the previous restrictions aimed at curbing property developer debt and give lenders permission to extend loans to home builders in financial trouble.

“These property measures, on top of announcements of Covid loosening, are a clear indication that Beijing’s efforts to support growth are intensifying,” said

Michael Hirson,

head of China Research at 22V Research, a New York-based firm focused on investment strategy.

While local governments across China have taken more modest measures to ease some of the pressure facing real-estate companies, the new bundle of 16 measures represents the single biggest step yet to rescue a sector that has for decades been a key pillar of growth for the world’s second-largest economy.

The property measures had led to falling home sales, hurting overall growth in the real-estate sector.



Photo:

Cfoto/Zuma Press

Chinese home prices for decades outpaced the rate of broader economic growth.



Photo:

Anthony Kwan/Bloomberg News

The new measures are “massive in scale” and amount to “targeted credit easing for the property industry,” said

Dan Wang,

chief economist at

Hang Seng

Bank China, who drew a contrast with previous rounds of incremental support measures.

As developers face looming loan repayment deadlines, regulators are eager to avoid any systemic risks in the financial sector triggered by a wave of potential defaults, Ms. Wang said. Even so, she added, “demand for home purchase remains weak,” with any reversal in housing-market sentiment likely to depend on the longer-term outlook for the economy.

The easing of real estate and Covid restrictions comes just weeks after Mr. Xi secured another five years in power at a closely watched Communist Party congress. With Mr. Xi having consolidated political control, he now faces the prospect of a third term in office facing the country’s worst prolonged economic slowdown in decades.

Much of the economic weakness is a direct product of his campaign-style clampdowns to crush Covid and, starting last year, tame a four-decade-old property market boom that officials have warned may be a bubble.

The property measures led to increased defaults by property developers, rising bad debts for banks, falling home sales and investment—all of which have weighed heavily on overall growth in recent quarters.

China’s gross domestic product expanded just 3.0% in the first nine months of 2022, well below the government’s official full-year target of about 5.5%, set in March.

China Evergrande Group, long the country’s largest developer, is now its biggest debtor.



Photo:

ALY SONG/REUTERS

Chinese home prices have for decades outpaced the rate of broader economic growth, driving more credit into real estate speculation and further pushing up property values. Authorities in recent years have repeatedly tried to break the vicious cycle with various tightening measures, only to loosen them whenever growth appears threatened.

By 2019, the total value of Chinese homes and developers’ inventory was $52 trillion, according to

Goldman Sachs Group Inc.,

twice the size of the U.S. residential market.

As Beijing tightened the screws on developers last year—and then reaffirmed their commitment to the tougher rules—several private developers began to teeter on the brink of crisis. Among the most prominent was

China Evergrande Group,

long the country’s largest developer and now its biggest debtor, though the concerns have spread to other large private players.

More than 30 developers have defaulted on their dollar-denominated bonds. International investors have dumped their bonds, driving price levels to new lows and leaving even the strongest private developers struggling to sell new debt.

Shares of Chinese property developers surged on Monday following the news.

Country Garden Holdings Co.

, one of the country’s largest real-estate companies by contracted sales, jumped 40% in early trading in Hong Kong, taking its gains this month to more than 200%. A Hang Seng subindex of property stocks rose 7%.

Prices of dollar bonds of developers that haven’t defaulted on their debt—including

Agile Group Holdings Ltd.

and

Longfor Group Holdings Ltd.

—also rose sharply from deeply distressed levels, as investors placed bets on their potential recovery. 

As the broader economic pain mounted this year, regulators and regional governments moved only modestly to try to avert a full-blown housing crisis, introducing limited measures such as tax rebates, cash rewards and lower down payments, as well as providing banks with window guidance to increase property lending. But those piecemeal moves have so far failed to reverse sentiment and lift the sector.

In October, sales at the country’s 100 largest property developers fell to the equivalent of $76.7 billion, down 28.4% from a year earlier and the 16th straight month of year-over-year declines, according to China Real Estate Information Corp., an industry data provider.

As foreign investors and home buyers lose confidence in China’s property market, developers are offering cars and pigs to boost sales. WSJ examines ads and policies to see how the country’s real estate turmoil could ripple out into the global economy. Photo composite: Sharon Shi

Now, with a new leadership team in place after the party congress—one packed with party members loyal to Mr. Xi—the top leader is moving toward a more concerted approach to shoring up the economy, part of a broader effort to brace for greater competition with the U.S.

“It seems that room for policy easing has widened post-party congress,” said

Larry Hu,

a Hong Kong-based economist at Macquarie. “After the impact of previous efforts turned out to be muted, policy makers are giving a big push now to get credit to flow to the property sector.”

Credit has been a particular headache for developers, since many had relied on heavy borrowing to build new projects and stay afloat. In the first nine months of this year, funds raised by China’s property developers dropped by 24.5%, according to data from the National Bureau of Statistics.

The new notice, jointly issued by the People’s Bank of China and the China Banking and Insurance Regulatory Commission, doesn’t represent a total reversal of Mr. Xi’s earlier efforts to tamp down exuberance in the sector.

‘Policy makers are giving a big push now to get credit to flow to the property sector.’


— Larry Hu, a Hong Kong-based economist at Macquarie

The notice, which has been billed as a package aimed at ensuring the sector’s “stable and healthy development,” still underlines the need to curb speculative real estate buying, repeating Mr. Xi’s mantra that “housing is for living in, not for speculating on.”

Under the new measures, developers’ outstanding bank loans and some types of nonbank credit due within the next six months can be extended for a year. Repayments on developers’ bonds can also be extended.

In addition, banks are encouraged to offer financing to unfinished housing projects and negotiate with home buyers on extending mortgage repayment, an apparent effort to help defuse growing resentment among those who have boycotted mortgage payments since the summer.

Banks are also encouraged to offer financing to support acquisitions of real-estate projects by financially sounder developers from weaker ones.

The new policies require financial institutions to treat state-owned developers and private developers equally, a measure that appears aimed at addressing banks’ reluctance to lend to private developers, according to

Yan Yuejin,

research director at Shanghai-based E-House China R&D Institute, a research firm.

“Regulators are making all-round efforts to target a soft landing for the property sector,” said

Bruce Pang,

chief China economist at Jones Lang LaSalle. Still, with the measures’ heavy skew toward improving liquidity for cash-strapped developers, he said, “these measures likely aren’t enough to avert the slowdown in the physical market.”

—Rebecca Feng contributed to this article.

Write to Lingling Wei at Lingling.Wei@wsj.com, Cao Li at li.cao@wsj.com and Stella Yifan Xie at stella.xie@wsj.com

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Home buyers are backing out of contracts in the Sun Belt, especially in Las Vegas, Phoenix, Tampa and Texas

The tide has turned, and buyers are now backing out of deals in the Sun Belt as rates rise and home prices remain unaffordable.

Once pandemic boomtowns, 15.2% of homes in cities in the Sun Belt that went under contract in August fell through, or roughly 64,000 homes nationwide saw deals dropped, a new report from real-estate brokerage Redfin Corp.
RDFN,
-5.33%
said.

A year ago, only 12.1% of home buyers were backing out of deals. Typically 12% of deals fell through prior to the pandemic, Redfin said. But the last time this number spiked — prior to this fall — was at the onset of the coronavirus pandemic in March/April 2020.

Buyers were most likely to back out of deals in the Sun Belt, the company added, in cities such as Phoenix, Tampa, and Las Vegas. Buyers were least likely to back out of purchases in big cities, including San Francisco and New York.

“A slowing housing market is allowing buyers to renege on deals because it often means they don’t need to waive important contract contingencies in order to compete like they did during last year’s home-buying frenzy,” Redfin noted.

Contingencies can include inspections to see if there’s any issues with the home, or whether they can get the mortgage required, or whether the appraisal is different from the agreed-upon amount.

‘A slowing housing market is allowing buyers to renege on deals.’


— Redfin

And “some buyers may also be backing out of deals because they’re waiting to see if home prices fall,” the company added.

More than a quarter of buyers looking to buy a home in Jacksonville, Fla. backed off in August, Redfin said, which is the highest percentage among the major 50 metro areas in the U.S. Las Vegas, Atlanta, and Orlando followed. (Top 10 list below)

These destinations were hotspots during the pandemic for buyers as they were affordable and in the era of remote-work.

But that’s changed.

“Sun Belt cities including Phoenix, Tampa and Las Vegas attracted scores of house hunters during the pandemic, driving up home prices,” Redfin said.

“Now their housing markets are among the fastest-cooling in the nation, giving buyers the flexibility to bow out,” they added.

Redfin analyzed Multiple Listing Services data going back to 2017 to analyze the drop-outs.

The share of buyers backing out of deals was the lowest in Newark, N.J., at 2.7%, followed by San Francisco, Nassau County, N.Y., New York City, and Montgomery County, Pa.

A big reason for the cancellations is high rates. The 30-year is at 6.29% as of Sept. 15. That’s up from 2.88% a year ago.

Homes are also still expensive. While existing-home prices are coming down, the median price of an existing home in the U.S. is still $389,500 in August, up 7.7% from a year earlier, the National Association of Realtors said.

‘I advise sellers to price their homes competitively based on the current market.’


— Sam Chute, a Miami-based real-estate agent at Redfin

With this tough backdrop of nervous buyers, “I advise sellers to price their homes competitively based on the current market,” Sam Chute, a Miami-based real-estate agent at Redfin said, “because deals are falling through and buyers are no longer willing to pay pie-in-the-sky prices.”

To be clear, the indigestion in the real-estate market was deliberately constructed: Home prices coming down as a result of higher rates and sellers reacting to lower demand is a “good thing,” Federal Reserve Chairman Jerome Powell said during a Wednesday press conference when they announced the rate hikes. 

“Housing prices were going up at an unsustainably fast level,” Powell said. 

“For the longer term, what we need is supply and demand to get better aligned, so that housing prices go up at a reasonable level …and that people can afford houses again,” he added. “The housing market may have to go through a correction to get back to that place.”

These are the top 10 cities where deals are falling through:

City Percentage of pending sales that fell out of contract
Jacksonville, Fla. 26.1%
Las Vegas, Nev. 23%
Atlanta, Ga. 22.6%
Orlando, Fla. 21.9%
Fort Lauderdale, Fla. 21.7%
Phoenix, Ariz. 21.6%
Tampa, Fla. 21.5%
Fort Worth, Tex. 21.5%
San Antonio, Tex. 21.1%
Houston, Tex. 20.6%

Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com

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U.S. Home Sales and Prices Fell in August as Mortgage Rates Rose

The U.S. housing market slowed for a seventh straight month in August, the longest stretch of declining sales since 2007, as higher mortgage rates continued to undercut buyer demand.

Home sales look poised to decline further in the coming months, economists say, as mortgage rates recently topped 6% for the first time since 2008, when the U.S. was in a recession. Many first-time buyers have been priced out of the market, and existing homeowners are opting to stay put rather than give up their current low rates.

“As long as mortgage rates remain elevated, sales will remain depressed,” said

Daryl Fairweather,

chief economist at real-estate brokerage

Redfin Corp.

The decrease in home sales is rippling through the economy. Consumers are spending less on housing-related items such as furniture and appliances, while construction of new single-family homes has also slowed.

Sales of previously owned homes dropped 0.4% in August from July to a seasonally adjusted annual rate of 4.8 million, the weakest rate since May 2020, the National Association of Realtors said Wednesday. August sales fell 19.9% from a year earlier.

The housing market has softened in recent months as the Federal Reserve aggressively raises interest rates to cool the economy and bring down high inflation. The Fed approved raising its benchmark federal-funds rate by 0.75 percentage point Wednesday.

The Fed’s interest-rate moves have led to higher mortgage-interest rates and increased borrowing costs for home buyers by hundreds of dollars a month, pushing many out of the market. The average rate on a 30-year fixed-rate mortgage was 6.02% in the week ended Sept. 15, up from 2.86% a year earlier, according to housing-finance agency

Freddie Mac.

The pandemic-fueled housing market activity in mid-2020 when many Americans moved to larger houses with more outdoor space while spending greater time at home. Bidding wars were widespread, and homes were often snapped up in a matter of days.

The recent increase in mortgage rates is expected to further weigh on home sales this month and next. Homes typically go under contract a month or two before the contract closes, so the August data largely reflect purchase decisions made earlier in the summer. Mortgage rates rose to 5.81% in June, then pulled back for much of the summer.

Economists have long said that renting and investing in the stock market is a better investment than owning a house, and in 2022 that could be especially true. WSJ’s Dion Rabouin explains. Photo illustration: Elizabeth Smelov

The drop in demand is reducing buyer competition, and home-price growth has slowed from last year’s rapid pace. But prices remain above where they stood a year ago, because the number of homes for sale is still below normal levels.

The median existing-home price rose 7.7% in August from a year earlier to $389,500, NAR said. Prices fell month-over-month for the second straight month after reaching a record high of $413,800 in June. While prices typically decrease in the late summer, the monthly declines have been bigger than normal, said

Lawrence Yun,

NAR’s chief economist.

The combination of high prices and rising interest rates has pushed home-buying affordability near its lowest level in decades. General economic uncertainty is also keeping buyers on the sidelines, said Odeta Kushi, deputy chief economist at

First American Financial Corp.

“To make the biggest financial decision of your life, you need to have some confidence in the economy, in your job, in the labor market,” she said.

Consumer sentiment toward the housing market fell in August to the lowest level since 2011, according to

Fannie Mae.

Many buyers rushed to purchase in the first few months of the year, because they expected mortgage rates to rise, reducing the number of buyers left in the market today, said Redfin’s Ms. Fairweather. “We’re experiencing an especially cold fall and winter, because the spring was so hot,” she said.

Philip Natale went under contract to buy a new home in Henderson, Nev., in December. By the time he locked in an interest rate this spring, rates had climbed from around 3% to above 5%, pushing up his monthly payment by several hundred dollars.

Philip Natale, with his mom, Michelle, in hat, says rising interest rates pushed up his monthly payment on a new Henderson, Nev., home. Charlie and Ashley Richards bought their first home in Charleston, S.C., in September. Philip Natale; Sandra Dawson

“It’s horrible,” he said, but he hopes to refinance the loan at a lower rate within the next year or two. “The first 12 to 18 payments are probably going to be a big bummer,” he added.

To save on costs, Mr. Natale is eating out less and has decided to delay buying a car. “I just don’t want to feel the stress of adding a car at the same time as I’m buying a home,” he said.

In the four weeks ended Sept. 11, 7.2% of homes on the market each week had a price drop, up from 3.8% a year earlier, according to Redfin. Homes on average sold for 0.5% below their final list price, compared with 1.1% above list price a year earlier.

Nationally, there were 1.28 million homes for sale or under contract at the end of August, down 1.5% from July and unchanged from August 2021, NAR said.

“Home-price growth is likely to continue to decelerate,” Oxford Economics—which forecasts that existing-home sales will fall further through the end of the year—said in a note to clients. “But the limited supply of homes for sale will likely prevent too steep a decline.”

Charlie and Ashley Richards, who are both 29, started shopping for the first home in Charleston, S.C., in June after they found out their rent was going up by $800 a month. 

“We got into the market at the right time. Stuff was starting to slow down a bit,” Mr. Richards said. “There were a handful of houses that we looked at that had been on the market for 30 to 60 to even 90 days.”

They bought a house this month for about 3% below the asking price. “I’m very excited,” Mr. Richards said.

Write to Nicole Friedman at nicole.friedman@wsj.com

The new home market, which accounts for about 10% of home sales, has also shown signs of weakness. A measure of U.S. home-builder confidence fell for the ninth straight month in September to the lowest level since May 2020, the National Association of Home Builders said this week. About one-fourth of builders surveyed said they had reduced prices in the past month, NAHB said.

Residential permits, which can be a bellwether for future home construction, also fell 10%, though housing starts rose 12.2% in August from July, the Commerce Department said this week.

News Corp,

owner of The Wall Street Journal, also operates Realtor.com under license from NAR.

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Prepare yourself: ‘The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006’

‘I don’t think that home sales are going to grind to a complete halt. They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.’


— Len Keifer, deputy chief economist at Freddie Mac

The U.S. housing sector is in the midst of the biggest slowdown in over a decade, one economist says. But don’t expect prices to fall back down to earth just yet.

“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,’” Len Keifer, deputy chief economist at Freddie Mac
FMCC,
-1.82%,
tweeted.

“It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer,” he explained.” He said home-purchase mortgage applications are down 40% from their most recent peak in 2021.

Purchases and refinance applications are in fact down to the lowest level in 22 years.

Mortgage applications as a data point “gives you a sense of where the market might be headed,” Keifer said in an interview with MarketWatch, “because that’s the early stages of when people are looking to buy a home. And if the volume of applications falls, that tends to indicate that in a month, month and a half, mortgage originations of home closings will also decline.”

Keifer expects home sales to henceforth “slow quite a bit over the summer.”

Meanwhile, Freddie Mac data released on Thursday morning revealed that mortgage rates have risen, on the back of rising interest rates and inflation.

To be clear, “I don’t think that home sales are going to grind to a complete halt,” Keifer stressed. “They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.”

Would prices fall as a result of a ‘contraction’?

While some may jump to the conclusion that weaker data represents a possible fall in home prices, experts caution otherwise.

“Does this mean that house prices are going to crash? I don’t think so,” Keifer said.

Freddie Mac’s research shows that when interest rates go up, while home sales and mortgage originations go up, house prices won’t necessarily fall or rise. “They tend to be stickier,” Keifer said.

“And while the rate of growth tends to slow, they don’t tend to fall,” he added.

Write to: aarthi@marketwatch.com



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China Evergrande Spillover Risks Can Be Controlled, Central Bank Says

China’s central bank sought to ease concern about potential contagion from

China Evergrande Group’s

debt crisis, saying the risk of the developer’s problems spilling over into the financial system was controllable.

Zou Lan, head of financial markets at the People’s Bank of China, on Friday said Evergrande had blindly diversified and expanded, Chinese state media outlets reported. That had led to its operations and finances seriously deteriorating, Mr. Zou said. But he added that the risk exposure of individual financial institutions to the developer isn’t big.

The company recently reported the equivalent of more than $300 billion of total liabilities, including $89 billion of debt.

Mr. Zou said relevant authorities and local governments are currently resolving the situation based on rule-of-law and market-oriented principles.

He said they were urging Evergrande to step up its asset disposals and resume projects to protect the interests of home buyers, and that financial authorities, the housing ministry and local governments would cooperate to provide funding support so projects could restart.

The central bank official added that Evergrande’s problems are an individual phenomenon and that land and housing prices have remained stable, which he said were signs of a generally healthy real-estate industry.

The central bank hasn’t directly addressed Evergrande’s challenges since the developer fell behind on dollar-bond payments last month, though it has said it would support the housing market. In August, it and other financial regulators summoned Evergrande executives to a meeting, telling them the company needed to resolve its debt issues without destabilizing the property and financial markets.

Home sales by China’s major developers fell sharply in September, a typically strong month. Fantasia Holdings Group Co., another Chinese developer, earlier this month said it failed to make a dollar bond payment, adding to the malaise surrounding China’s highly indebted property companies.

Evergrande, China’s most indebted property developer, has kept global markets on edge and sparked protests at home as it struggles to survive. WSJ explains why the company’s crisis is raising questions about the state of the world’s second-largest economy. Photo: Alex Plavevski/Shutterstock

Separately, Hong Kong’s Financial Reporting Council said it was investigating whether recent financial statements by Evergrande had adequately addressed so-called going-concern issues, or warnings made in accounts if there are question marks about a company’s ability to stay afloat.

In a statement Friday, the audit watchdog said it had “identified questions about the adequacy of reporting on going concern” in the Hong Kong-listed company’s most recent annual and first-half accounts and in the auditor’s report by PricewaterhouseCoopers for 2020. The regulator said it had begun an investigation of PwC’s audit and an inquiry into Evergrande’s recent accounts.

The Wall Street Journal reported last month that PwC hadn’t included a going-concern warning when it signed off on Evergrande’s 2020 accounts. However, the bar to issue such warnings is high, and any concerns about the company’s financial health may have been insufficient to trigger such a notice, the Journal reported.

China Evergrande Group: Stalled Construction, Massive Debts

Write to Elaine Yu at elaine.yu@wsj.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the October 16, 2021, print edition as ‘China Plays Down Risks From Evergrande Crisis.’

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Beyond Evergrande, China’s Property Market Faces a $5 Trillion Reckoning

It might not be the last.

As China enters what many economists say is the final stage of one of the largest real-estate booms in history, it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good, according to economists at

Nomura Holdings Inc.

That debt is nearly double what it was at the end of 2016 and is more than the entire economic output of Japan, the world’s third-largest economy, last year.

Global markets are braced for a possible wave of defaults, with warning signs flashing over the debt of about two-fifths of development companies that have borrowed from international bond investors.

Chinese leaders are getting serious about addressing the debt, with a series of moves meant to curb excessive borrowing. But doing so without torpedoing the property market, crippling more developers and derailing the country’s economy is quickly turning into one of the biggest economic challenges Chinese leaders have faced in years, and one that could reverberate globally if mismanaged.

Luxury developer

Fantasia Holdings Group Co.

failed to repay $206 million in dollar bonds that matured Oct. 4. In late September, Evergrande, which has more than $300 billion in obligations, missed two interest-payment deadlines for bonds.

Asia’s junk-bond markets suffered a wave of selling last week. On Friday, bonds from 24 of the 59 Chinese development companies in an ICE BofA index of Asian corporate dollar bonds were trading at yields of above 20%, levels that indicate high risk of default.

Some prospective home buyers are balking, forcing the companies to cut prices to raise cash, and potentially accelerating their slide if the trend continues.

The Evergrande Fairyland complex in Lu’An, China, with towers under construction. Evergrande recently missed two bond-interest deadlines.



Photo:

Raul Ariano for The Wall Street Journal

Total sales among China’s 100 largest developers were down by 36% in September from a year earlier, according to data from CRIC, a research unit of property services firm

e-House (China) Enterprise Holdings Ltd.

It showed that the 10 biggest developers, including China Evergrande,

Country Garden Holdings Co.

and

China Vanke Co.

, saw sales down 44% from a year ago.

Economists say that most Chinese developers remain relatively healthy. Beijing also has the firepower and tight control of the financial system needed to prevent a so-called Lehman moment in which a corporate collapse snowballs into a financial crisis, they say.

In late September, The Wall Street Journal reported that China had asked local governments to prepare for problems potentially intensifying at Evergrande.

But many economists, investors and analysts agree that even for healthy ventures, the underlying business model—in which developers use debt to fund a steady churn of new construction despite demographics becoming less favorable for new housing—is likely to change. Some developers might not survive the transition, they say.

Of particular concern is some developers’ practice of relying heavily on “presales,” in which buyers pay in advance for still-uncompleted apartments.

The practice, more common in China than the U.S., means developers are in effect borrowing interest-free from millions of households, making it easier to continue expanding but potentially leaving buyers without finished apartments should the developers fail.

Presales and similar deals were the sector’s biggest funding source this year through August, according to the National Bureau of Statistics of China.

A model of a residential compound by China Vanke, a large developer, at its showroom in Dongguan, China.



Photo:

china stringer network/Reuters

“There is no return to the previous growth model for China’s real-estate market,” said

Houze Song,

a research fellow at the Paulson Institute, a Chicago think tank focused on U.S.-China relations. He said China is likely to keep in place a set of limits on corporate borrowing it imposed last year, known as the “three red lines,” which helped trigger the recent distress at some developers, though he said China might ease some other curbs.

While Beijing has avoided clear public statements on its plans for dealing with the most indebted developers, many economists believe leaders have no choice but to keep the pressure on them.

Policy makers appear determined to revamp a model driven by debt and speculation as part of President

Xi Jinping’s

broader efforts to defuse hidden risks that could destabilize society, especially ahead of important Communist Party meetings next year. Mr. Xi is widely expected then to break with precedent and extend his rule into a third term.

Beijing is worried that after years of rapid home-price gains, some people may be unable to get on the housing ladder, potentially fueling social discontent as wealth gaps widen, economists say. Young couples in large cities are beginning to get priced out, making it harder for them to start families. The median apartment in Beijing or Shenzhen now costs more than 40 times the median family annual disposable income, according to J.P. Morgan Asset Management.

Authorities have said they are worried about the property market posing risks to the financial system. Reining in the developers’ business models and limiting debt, however, is almost certain to slow investment and cause at least some downturn in the property market, which is one of the biggest drivers of China’s growth.

The real-estate and construction industries account for a large part of China’s economy. A 2020 paper by researchers

Kenneth S. Rogoff

and

Yuanchen Yang

estimated that the industries, broadly construed, accounted for 29% of China’s economic activity, far more than in many other countries. Slower growth in housing could spill into other parts of the economy, affecting consumer spending and employment.

Government statistics show about 1.6 million acres of residential floor space was under construction at the end of last year. That was equal to about 21,000 towers with the floor area of the Burj Khalifa in Dubai, the world’s tallest building.

As restrictions on borrowing imposed last year kicked in, housing construction tumbled in August to 13.6% below its pre-pandemic level, calculations by Oxford Economics show.

The revenue local governments earn by selling land to developers fell by 17.5% in August from a year earlier. Local governments, which are also heavily indebted, count on land sales for much of their revenue.

The Luwan 68 development by Fantasia Holdings Group in Shanghai. The luxury developer failed to repay $206 million of dollar bonds that matured on Oct. 4.



Photo:

Qilai Shen/Bloomberg News

A further slowdown also would risk exposing banks to more bad loans. Outstanding property loans—primarily mortgages, but also loans to developers—accounted for 27% of China’s total $28.8 trillion in bank loans at the end of June, according to Moody’s Analytics.

As pressure on housing mounts, several research houses and banks have cut China’s growth outlook. Oxford Economics on Wednesday lowered its forecast for China’s third quarter year-on-year gross domestic product growth to 3.6% from 5% previously. It trimmed its 2022 growth forecast for China to 5.4% from 5.8%.

As recently as the 1990s, most of China’s city residents lived in drab dwellings provided by state-owned employers. When market reforms started transforming the country and more people moved to cities, China needed a massive new supply of higher-quality apartments. Private developers stepped in.

Over the years, they added millions of new units in modern, well-maintained high-rises. In 2019, new homes made up more than three-quarters of home sales in China, versus less than 12% in the U.S., according to data cited by Chinese property broker

KE Holdings Inc.

in a listing prospectus last year.

In the process, the developers became much bigger than anything seen in the U.S. The largest U.S. home builder by revenue,

D.R. Horton Inc.,

reported $21.8 billion of assets at the end of June. Evergrande had some $369 billion. Its assets included vast land reserves and 345,000 unsold parking spaces.

For much of the boom, the developers were filling a need. In more recent years, policy makers and economists began to fret that much of the market was driven by speculation.

Chinese households are restricted from investing abroad, and domestic bank deposits offer low returns. Many people are wary of the country’s boom-and-bust stock markets. So some have poured money into housing, in some cases buying three or four units without any intention of living in them or renting them out.

As developers bought more locations to build on, land sales pumped up national growth statistics. Dozens of entrepreneurs who had founded development companies showed up in lists of Chinese billionaires. Ten of the 16 soccer clubs in the Chinese Super League are wholly or partly owned by developers.

Residential skyscrapers being built in Shanghai, in November 2016.



Photo:

Johannes EISELE/AFP via Getty Images

The real-estate giants have borrowed not only from banks but also from shadow-banking outfits known as trust companies and from individuals who put their savings into investments called wealth-management products. Abroad, they became a mainstay of international junk-bond markets, offering juicy yields to get deals done.

One builder,

Kaisa Group Holdings Ltd.

, defaulted on its debt in 2015, yet was able to keep borrowing and expanding afterward. Two years later it spent the equivalent of $2.1 billion to buy 25 land parcels, and in 2020 spent $7.3 billion for land. This summer, Kaisa sold $200 million of short-term bonds yielding 8.65%.

Nomura estimated that as of June, Chinese developers had racked up debts of $5.2 trillion. It said the biggest share, 46%, was in bank loans. Bond markets accounted for about 10%, including the equivalent of $217 billion of dollar bonds, many of them junk-rated.

By last year, Chinese policy makers had had enough. In August 2020, they introduced the three-red-lines rules limiting how much borrowing developers could do. Some companies with short-term obligations they couldn’t pay without new funding had to start discounting apartments to raise money.

Authorities have tried to curb demand in some places by slowing mortgage lending. They have put caps on existing-home prices in about a dozen cities to tame speculation, according to state media reports.

When old-fashioned funding sources like bank loans grew harder to access, developers became more reliant on presales of unfinished apartments. These made up 26% of the debt in Nomura’s tally.

Presales are often recorded as contract liabilities, an item that shows up on the balance sheets of sector heavyweights such as Evergrande, Country Garden, China Vanke,

Sunac China Holdings Ltd.

and

China Resources Land Ltd.

For these five combined, contract liabilities have jumped 42% in the past three years to the equivalent of $341 billion as of the end of June, FactSet data show.

Developers have also made more use of other liabilities that, like presales, don’t strictly count as debt, such as borrowing more from business partners by taking longer to pay contractors or suppliers.

The construction site of a Vanke residential building in Dalian, China, in 2019.



Photo:

Reuters

Goldman Sachs Group Inc.

analysts recently estimated Evergrande had the equivalent of $156 billion of off-balance-sheet debt and contingent liabilities, including mortgage guarantees to help home buyers get loans.

Share Your Thoughts

Can China cool developers’ borrowing binge without torpedoing the property market and hurting the economy? Join the conversation below.

The other problem for developers, and for China’s property market overall, is the way some of the trends that fueled the boom are reversing.

China’s population is aging. Its workforce has been shrinking since 2012, and official forecasts last year predicted the total population would peak in 2027.

Homeownership is already over 90% for urban households in China, among the highest in the world, according to Mr. Rogoff and Ms. Yang. They cited earlier Chinese research saying that as of late 2018, 87% of home purchases were by buyers who already had at least one dwelling.

Julian Evans-Pritchard,

an economist at Capital Economics, said his firm has looked at developers’ ability to meet their obligations from cash holdings and doesn’t think most are on the brink of default. But, citing changing demographics and reduced internal migration, he said “we’re now at a turning point where actually demand for new urban housing is going to decline over the coming decade. So they’re going to be fighting over a shrinking pie.”

Deng Lin,

a 33-year-old lawyer in Shanghai, planned to sell two properties she owns to buy a bigger one after she gave birth to twins this summer. The government’s clampdown on debt risks derailing her plan of upgrading to a three-bedroom, which she estimates could cost up to $1.86 million.

Tightened mortgage rules means she would have to pay 80% upfront. Banks have been slow to approve her loan application.

“There’s simply too much uncertainty in the market,” she said.

Write to Quentin Webb at quentin.webb@wsj.com and Stella Yifan Xie at stella.xie@wsj.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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The Beauty of Buying a Ski Home in Idaho? Nobody Knows a Thing About It

Schweitzer Mountain has 2,900 acres, great snow and stunning lake views; it’s Idaho’s largest ski terrain area.

Most people have never heard of it.

“We have no lift lines. It’s low-key, it isn’t pretentious and there’s a strong sense of community,” says David Thompson, a retired surgeon from Houston who bought a ski-in, ski-out house there with views of Lake Pend Oreille in 2009 for $850,000.

It isn’t easy to get to Schweitzer—the closest major airport is in Spokane, Wash., about a two-hour drive, including a steep road with sharp switchbacks. The two fastest routes from Idaho’s capital, Boise, are 10-12 hours and involve going through either Washington or Montana.

There aren’t many shops and hotels right at the mountain’s base, and cell and internet service can be spotty in the area. Residents have to pick up their mail in the village.

But Schweitzer is in the midst of a dramatic transformation, aiming to become a destination resort. Last season it added seven runs and two lifts and joined the Ikon Pass, a 47-mountain destination ticket that gives members access to elite ski areas around the world, including Aspen, Colo., Jackson Hole, Wyo., Utah’s Deer Valley, Vermont’s Killington and Zermatt in Switzerland.

The resort village, with a year-round population of about 65, currently looks like a giant construction site, as the resort embarks on a multiphase rollout of residential development. An angled, contemporary glass-and-steel hotel and restaurant, designed by hip Portland, Ore., firm Skylab Architecture, is rising amid the more traditional alpine condos and lodges. The skeletons of new modern houses and townhouses bolstered by steel rods now inundate the steep slopes.

Demand for real estate is so high that there are currently no houses on the market for sale and only two condos—a stark difference from the 40-50 units for sale in the wider area at any given time in the past, says Patrick Werry, an agent with Century 21 Riverstone. Home prices have risen 40% over the past year in this resort village of about 700 homes.

Last year Schweitzer joined the Ikon pass, a 47-mountain destination ticket that gives members access to elite ski areas around the world, including Aspen, Colo., Jackson Hole, Wyo., Utah’s Deer Valley, Vermont’s Killington and Zermatt in Switzerland.



Photo:

Schweitzer

“Everyone is trying to get on the bandwagon,” says Craig Mearns of M2 Construction, which has a three-year waiting list to even start building a custom house. Its latest spec project sold out in a month, even when prices increased from $550,000 to $950,000 for a unit.

What’s happening at Schweitzer is happening all over Idaho. The state is in the midst of a ski renaissance. As its resorts expand their ski terrain and add amenities, demand for homes is booming.

“Idaho is attracting people who want a smaller resort experience—the feel that other Western resorts used to offer but don’t anymore,” says Thomas Wright, president of Summit Sotheby’s International Realty.

Idaho’s ski resorts are scattered across the state and their characters are as different as the terrain that surrounds them, from the arid, celebrity-infused Sun Valley, to the insular, pine-tree dense village of Tamarack, north of Boise. All the way east is the wilder, remote Grand Targhee, in the Teton Range, located in Alta, Wyo., just on the border with Idaho. But the appeal of all these places is the same: low-key, uncrowded skiing with consistent snow.

At Tamarack, the insular, pine-tree dense village north of Boise, the snow is consistently powdery, there are almost never lift lines and there’s lots of backcountry skiing. Opened in 2004, then shut in 2008 due to bankruptcy, Tamarack is in the midst of a resurgence. The resort’s lifts currently service about 1,000 acres of skiable terrain. VIDEO: Todd Meier for The Wall Street Journal

Real-estate agents say the demand for ski resort homes is an offshoot of the demand for homes in Idaho overall, a movement fueled by the pandemic, with people looking for properties with more space and, in some cases, more lax Covid restrictions. (Idaho is currently in a hospital resource crisis because of its high rate of Covid.)

Idaho’s home prices have grown 42% in the past two years—twice the national average and the highest of all the states, according to Nik Shah, CEO of Home LLC., a down payment assistance provider.

“Most of my friends are like ‘Idaho, what’s there?’ My response is, ‘exactly—it’s because you don’t know about it,’ ” says Harmon Kong, a 57-year-old investment adviser from Lake Forest, Calif.

Mr. Kong and his wife, Lea Kong, fell hard last year for Tamarack and bought two places: a ski-in ski-out, three-bedroom, three-bathroom penthouse condo in the fall of 2020 for $1.8 million, and three-bedroom, three-bathroom chalet nearby for $1.28 million.

Mr. Kong was used to skiing at Heavenly Ski Resort in Lake Tahoe, Calif., which he likens to Disneyland because of the crowds. At Tamarack, he says the snow is routinely powdery, there are hardly ever lift lines and there’s lots of backcountry skiing.

Opened in 2004, then shut in 2008 due to bankruptcy, Tamarack is in the midst of a resurgence. The resort’s lifts currently service about 1,000 acres of skiable terrain and it has applied to the U.S. Forest Service for permits to add seven to nine new lifts, including a gondola, and more than double its size by adding 3,300 new acres of ski terrain and a new summit lodge.

Building is underway on ambitious, multiphase residential development projects, which will result in 2,043 residential units, including about 1,000 hotel rooms and a mix of condos, estate homes, townhomes, cottages and chalets. Tamarack is in the process of starting a charter school. The average sold price for a home in Tamarack, which has about 450 homes in all, has grown 80% over the past two years, according to the Mountain Central Association of Realtors.

To attract more skiers, this past year Tamarack joined the Indy Pass, which includes small, independent resorts around North America. The resort’s president Scott Turlington is aiming for 500,000 skier visits over the next couple of seasons (up from 120,000 last season), which he acknowledges might make him persona non grata among some of the current homeowners. “If I do my job properly I won’t be the most popular person,” he says.

Ski Magazine readers voted Sun Valley the country’s top ski resort in Western North America in 2021, in part because of its comparably short lift lines. However, last year it became a partner in the Epic pass, a move that could bring more skiers. Sun Valley has been growing its ski operations. Last season it added 380 acres of skiable terrain on Bald Mountain and a new high-speed chairlift. VIDEO: Sun Valley Resort

Still, Mr. Turlington says, “We want to maintain our rugged individualism and independent spirit. It’s a very different feeling here than at one of the top resorts.”

The top ski resort in Idaho is Sun Valley. In fact, Ski Magazine readers voted Sun Valley the top ski resort in Western North America in 2021, in part because of its comparably short lift lines. It’s located in an arid, high-altitude and desert-like environment and its famed Sun Valley Lodge has walls lined with photos of celebrities like Marilyn Monroe, Ernest Hemingway and Tom Hanks. Business moguls and world leaders convene there every summer for the annual Allen & Company conference.

Sun Valley has also been growing its ski operations. Last season, it added 380 acres of skiable terrain on Bald Mountain and a new high-speed chairlift. It became a partner in the Epic Pass, which includes mountain resorts like Colorado’s Vail, Utah’s Park City and Whistler in Canada, a move to bring more skiers to the mountains.

Sun Valley Resort’s vice president and general manager Pete Sonntag says the resort has no plans to expand further for now. “Our goal is never about competing for the most skiers. It’s about improving the guest experience,” he says, adding, “The remote location will keep it from feeling overrun.”

But, like many resort towns, the issue of development and affordable housing is a hot topic right now. “There’s a huge concern about people getting priced out,” says Katherine Rixon, a real-estate agent with Keller Williams Sun Valley. Property values have appreciated so much that many owners of rental properties are cashing out of the market, leaving their tenants having to find a new place to live in an already tight rental environment. And at the same time, rental rates have doubled in the past year. There are a number of government and nonprofit groups working on increasing housing for the workforce, she says.

The number of sold homes was up 71% in August compared with a year earlier, the median price was up 20%, and the number of homes for sale down 56%. A three-bedroom, three-bathroom townhouse Ms. Rixon sold at Sun Valley last year for $2 million just resold for $3.6 million.

“People here complain when there’s four people in the lift line,” says Jean-Pierre Veillet, a real-estate developer. He moved with his family this summer from Portland, Ore., to Bellevue, about half an hour from Sun Valley’s main town of Ketchum, in part because his 15-year-old son Oliver is a ski racer and was attending a boarding school in the area.

Mr. Veillet, 50, and his wife, Summer Veillet, 45, bought a four-bedroom, two-bathroom, 3,000-square-foot house with a library, a three-car garage and a barn on 10 acres for $1.3 million in March. They’d been looking for a house in Ketchum and Hailey, the two towns in the area which are closer to the slopes, but gave up after not finding anything for a year.

Mr. Veillet still works in Portland, and even though that’s not far geographically, getting back and forth is strenuous because there are no nonstop flights to the small Sun Valley airport. The Veillets say there are pros and cons of living there: the skiing is great, Oliver is thriving, and their younger son, Zealand, who is 10 and is home-schooled, is getting a great education from the growing, fishing and renovating the family is doing.

On the other hand, the internet is terrible, there can be fierce windstorms and there’s no food delivery service. “It’s been a hard transition. It can be hard to slow down and make a change in life,” says Mr. Veillet.

David and Kimberly Barenborg just moved to Ketchum, into a five-bedroom, five-bathroom, over 4,000-square-foot log cabin-style house with a guest cottage in a quiet neighborhood right along a stream. They bought it for about $4 million in August after they sold their house in the Seattle suburb of Mercer Island.

Mr. Barenborg, 60, who co-founded a financial advisory firm, wanted somewhere that had sun, felt safe and where he could ski, bike and fish. “It’s just play time,” he says. “I’m so happy here.”

The only catch is the threat of development on a 65-acre dog park and green space that’s directly across the creek from their new home. He is working to help the town raise the $9 million the developer is asking for the property. He says the process has been slow going but the community is starting to see the value of protected green space. “Everyone is overwhelmed by what’s going on,” says Mr. Barenborg, referring to the rapid growth that’s stressing the town’s infrastructure.

The rapid growth is also increasing jobs, but Heidi Husbands, a council member in Hailey, says Sun Valley is currently facing a shortage of workers because people can’t afford to live there anymore. Ketchum approved funding for an affordable housing project, but it is still controversial. At one point the town considered allowing workers to put tents in a park, but that idea was canceled.

Schweitzer Mountain resort, owned by Seattle-based McCaw Investment Group, plans to add a whole new ski area, with four new lifts and a new lodge ove the next five to 10 years.



Photo:

Schweitzer

SHARE YOUR THOUGHTS

Do you think the demand for ski resort homes is a passing trend, or could it mark a long-term shift? Join the conversation below.

Some residents of Schweitzer are also worried about more crowds, traffic and a shortage of housing. The resort, owned by Seattle-based McCaw Investment Group, just sold out a 35-lot subdivision and broke ground on an addition to a condo building. In a few weeks, it will start building a new residential neighborhood with cabins before embarking on several others later next year. In five to 10 years, the resort plans a whole new area, with four new lifts and a new lodge.

The potential impacts from climate change are also an issue. Schweitzer CEO Tom Chasse says, “Strategically, we are concerned about the snow level. We are seeing a change in precipitation. The snow lines have been moving up for the last few seasons. So we want to make sure we have lift access to the higher elevations and we are doing feasibility studies on adding snow-making on the lower levels.”

However, Mr. Chasse says the resort has plenty of room to grow. “We want to increase our sophistication level,” he says.

Schweitzer’s CEO Tom Chasse says the resort has plenty of room to grow. “We want to increase our sophistication level,” he says.



Photo:

Schweitzer

Write to Nancy Keates at nancy.keates@wsj.com

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Towns Trying to Ban Natural Gas Face Resistance in Their Push for All-Electric Homes

Massachusetts is emerging as a key battleground in the U.S. fight over whether to phase out natural gas for home cooking and heating, with fears of unknown costs and unfamiliar technologies fueling much of the opposition to going all-electric.

More towns around Boston are debating measures to block or limit the use of gas in new construction, citing concerns about climate change. The measures have encountered opposition from some home builders, utilities and residents in a state with cold winters, relatively high housing prices and aging pipeline networks in need of pricey repairs.

The Massachusetts debate encapsulates the challenges many states face in pursuing aggressive measures to reduce greenhouse gas emissions that may directly impact consumers. The cost of fully electrifying buildings varies widely throughout the country and has ignited debates about who should potentially pay more, or change their habits, in the name of climate progress.

Much of the resistance to electrifying new homes stems from fear of having to heat or cook using technologies such as heat pumps and induction stoves that most have never tried. In New England, most homes are heated with fuel oil or natural gas, and gas or propane is used widely for cooking.

Steve McKenna, a Massachusetts realtor, was hired last year to sell a new, all-electric home in Arlington, a town outside of Boston that is considering gas restrictions. The home initially listed for $1.1 million, but many prospective buyers were uncomfortable with the prospect of facing higher electric bills, Mr. McKenna said. It ultimately sold for about $1 million.

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