The Unassuming Economist

1. Housing View – February 2, 2024
2. Housing View – January 5, 2024
3. Housing View – January 19, 2024
4. Housing View – March 1, 2024
5. Housing View – July 26, 2024
6. Housing View – February 23, 2024
7. Housing View – January 26, 2024
8. Housing View – January 12, 2024
9. Housing View – August 23, 2024
10. Housing View – March 22, 2024

From a paper by Zaid Tahat:

“This thesis investigates the dynamic linkages among financial, industrial, service, and general
indices of the Amman Stock Exchange (ASE) in Jordan from 2000 to 2020 using a vector
autoregression (VAR) model and by using daily data. The main aim is to provide a
comprehensive understanding of the interrelationships among these key sectors over the 21-year
period. The objectives are to examine both short-term and long-term dynamic linkages, assess
the model’s explanatory power for variations in sector indices, and derive insights for investors
and policymakers.

The study employs a VAR methodology to capture the dynamic interactions among the sector
indices. Daily data on sector indices is analyzed using Granger causality tests, impulse response
functions, and variance decomposition to quantify the linkages.

The findings reveal significant dynamic linkages among ASE sector indices. The VAR model
exhibits high explanatory power, with R-squared and adjusted R-squared values above 99% for
all sectors. Granger causality tests indicate bi-directional causality between the financial and
general indices and between the service and industrial indices. Impulse response functions show
that shocks to each sector have significant effects on the other sectors that persist over several
days. Variance decomposition analysis attributes 27-38% of forecast error variance in each
sector to innovations in other sectors, affirming the importance of intersectoral relationships.
The empirical evidence can inform portfolio diversification and risk management strategies for
investors. For policymakers, the findings underscore the importance of considering spillover
effects in regulatory frameworks governing the financial sector and capital markets.

To mitigate systemic risk and promote stability, policymakers could consider implementing
macroprudential policies such as countercyclical capital buffers, exposure limits, and liquidity
requirements that account for the interconnectedness of sectors. Enhancing transparency through
disclosure requirements and stress testing that incorporate intersectoral linkages could also help
monitor and manage systemic risk. Coordination among regulators overseeing different sectors
may be warranted to address cross-sector vulnerabilities. Overall, a holistic approach that
recognizes the dynamic linkages among sectors is recommended to foster a resilient financial
system.”

From a paper by Nasser Khiabani  and Solaleh Tavassoli:

“This study reviews the evolution of national and regional housing models that developed and received much attention in the housing economics literature. From this point of view, first, we focus our attention on the econometric modeling of national housing markets and discuss their limitations in twofold: inferring individual-level relations from aggregate-level data or aggregate shocks, and assuming spatial homogeneity in all regions. These two problems will be addressed precisely in the newly developed regional housing market models by identifying the sources of cross-sectoral dependence, namely, spatial and temporal dependence. Spatial dependence refers to how spatial factors influence economic processes. It is measured through a spatial weighting matrix. Cross-sectional dependence stemming from common factors is attributed to economy-wide shocks that affect all individuals with different intensities coming from different macro shocks, such as interest rates, oil prices, and technology shocks.”

From a paper by David M. Brickman:

“Over the past four decades, the multifamily housing market has grown and evolved significantly to become a much more prominent part of the US housing landscape. Since 1990, the total value of the multifamily housing stock has grown more than tenfold, from less than $600 million to more than $6
billion today, as both the number and value of multifamily housing units have steadily increased. Although a broad range of macroeconomic and demographic factors have contributed to this growth, the primary catalyst has been the establishment of well-functioning multifamily capital markets, defined by large liquid debt and equity markets and a largely unconstrained private rental market. Against this backdrop, multifamily housing has become a standout among commercial real estate in terms of capital flows and performance while disproportionately contributing to the nation’s supply of newly constructed housing at this moment of intense shortages and affordability challenges.

Given the success of the modern multifamily capital and housing markets, there is value in understanding their development to identify market areas in need of additional investment and to inform regional and global markets elsewhere. To that end, this brief identifies and examines key moments in the evolution of multifamily debt and equity flows from the late 1980s through today and their impact on capitalization rates, property values, housing supply, rental rates, and rent growth. The brief concludes with a discussion of policy implications.”

Continue reading here.

On cross-country:

• Housing in Europe – 2024 edition – Eurostat
• Global Housing and Mortgage Outlook 2025 – Fitch Ratings

Working papers and conferences:

• Monetary policy and housing markets: insights using a novel measure of housing supply elasticity – BIS
• Assessing expectations of European house prices – ESRI
• Assessing Assessors – NBER
• The Forces Keeping Home Prices High. Cameron Murray on housing market equilibria – Home Economics

On the US—developments on house prices, rent, permits and mortgage:    

• Realtor.com 2025 Housing Forecast – Realtor.com
• Where home prices are expected to go in 2025, predicted by real estate data giant. Given the recent jump in inventory, CoreLogic now has lower expectations for national home price growth in 2025. – Fast Company
• How 2024’s Housing Market Sets the Stage for 2025 – CoreLogic
• House Price Appreciation by State and Metro Area: Third Quarter 2024 – NAHB
• Housing Markets Facing Greater Risk of Decline Concentrated in California, New Jersey, Illinois, and Florida – ATTOM
• Top 10 Most Vulnerable U.S. Housing Markets in Q3 2024 – ATTOM
• Asking Rents Mostly Unchanged Year-over-year – Calculated Risk
• Home Price Expectations Survey – Fannie Mae
• Expert Panel Upwardly Revises Home Price Growth Outlook, Still Expects Deceleration in 2025 and 2026. Panel Also Forecasts Stagnant Home Sales and Only Modestly Lower Mortgage Rates – Fannie Mae
• 1st Look at Local Housing Markets in November. Another Year-over-year Sales Gain in November – Calculated Risk
• Mortgage Rates Rise in November Amid Post-Election Market Volatility – NAHB
• Wall Street Is Betting Billions on Rental Homes as Ownership Slips Out of Reach. Build-to-rent homes offer upscale amenities and desirable locations – Wall Street Journal
• Part 1: Current State of the Housing Market; Overview for mid-December 2024 – Calculated Risk
• What Determines the Rate on a 30-Year Mortgage? – Fannie Mae

On the US—other developments:    

• A ‘Silver Tsunami’ Won’t Solve Housing Affordability Challenges – Zillow
• Trump Policies 2.0: What Can State, Local Governments Expect? – CoreLogic
• December CPI Blog: Updating our Housing Model – The White House
• November’s Housing Market Crawled to Its Slowest Pace in 5 Years—Even as Prices Fell and Housing Stock Jumped – Realtor.com
• New York City Approves a Plan to Create 80,000 New Homes. The City Council passed a major housing plan known as “City of Yes.” Experts and elected officials say it is only a first step to address the housing crisis. – New York Times  
• The Insurance Crisis Continues to Weigh on Homeowners – Harvard Joint Center for Housing Studies
• How Bob Dylan, Housing Prices, and Harvard show that Networks Matter. Dylan’s journey from unknown to icon illuminates a broader truth about success: networks matter, and access to them is becoming increasingly restricted. – The Studies Show
• Consumer Housing Sentiment Up Significantly Year over Year. Jump in Confidence Driven Largely by Increased Optimism that Mortgage Rates Will Fall – Fannie Mae
• Questioning the Housing Crisis: Introduction to a Series – Cato Institute
• Housing Availability and Affordability: Evidence That the United States Is Not in a Crisis. During the past few years many groups have suggested that the United States is experiencing a housing crisis, one marked by a supply deficit and affordability problems. – Cato Institute
• How big is the U.S. housing shortage? – NPR
• Mortgage Regulators Are Shrugging Off Climate Risk. It Could Cost Taxpayers Billions. Fannie Mae and Freddie Mac, which backstop most U.S. mortgages, know floods and fires are a growing problem. But little action has been taken. – New York Times
• Foreclosure Filings Ease Nationwide in November 2024 Amid Seasonal Influences – ATTOM
• Why Housing Is a Frontline Defense Against Climate Change – Time
• Inflation Remains Sticky Despite Easing Housing Costs – NAHB
• Can the U.S. Climb Out of Its ‘Unprecedented’ Housing Crisis? The 2024 housing market was the slowest in decades. Next year’s might not be much better. It may come down to how many new homes can be built. – New York Times 
• Wall Street Is Betting Billions on Rental Homes as Ownership Slips Out of Reach. Build-to-rent homes offer upscale amenities and desirable locations – Wall Street Journal
• The Housing Industry Never Recovered From the Great Recession. A decade of depression in construction led to a concentrated, sclerotic industry. – The American Prospect

On Australia and New Zealand:

• [Australia] How the housing crisis is reshaping Australia – The Guardian
• [Australia] Forced to move by the Australian housing crisis: three-hour commutes and ‘never mind seeing your family’ – The Guardian
• [New Zealand] An American-Style Housing Crisis in New Zealand. What the United States can learn from the Pacific nation – The Atlantic

On other countries:  

• [Canada] Why were these mortgage borrowers left out of the latest stress-test change? – The Globe and Mail
• [Ireland] Irish House Prices Are Overvalued by Up to 10%, Says ESRI. Housing supply constraints has led to an increase in prices. Report says property market at risk of a ‘painful correction’ – Bloomberg
• [Ireland] ESRI again highlights regulator’s role in fanning house prices. Think-tank not backing off previous suggestion that loosening mortgage rules boosted the property market – The Irish Times
• [Italy] Renters in Rome struggle as coming Holy Year dries up housing market – Reuters
• [Korea] The Bank of Korea Moves Beyond Monetary Policy. Earlier this year, South Korea’s central bank worked with government ministries to devise macroprudential measures to stabilize the country’s housing market. This shows that monetary policymakers can, and perhaps should, play a critical role in tackling structural challenges that could profoundly affect future prosperity. – Project Syndicate
• [Portugal] Portugal’s Residential Property Market Analysis 2024 – Global Property Guide
• [South Africa] South Africa’s Residential Property Market Analysis 2024 – Global Property Guide
• [Spain] El precio de la vivienda no cede y sube otro 8,1% en el tercer trimestre, su mayor repunte en dos años y medio. Los pisos a estrenar se encarecen casi un 10% en un año, según el Instituto Nacional de Estadística. Los desahucios sobre residencia habitual caen más de un 20% respecto al segundo trimester – El Pais
• [Switzerland] Switzerland Residential Property Market Analysis 2024 – Global Property Guide
• [United Kingdom] Prioritise people’s needs ‘over newts’ in housing policy, says Angela Rayner. Housing secretary says wildlife should be protected but not at the expense of building the homes the country needs – The Guardian
• [United Kingdom] UK House Prices Jump Most in Over Two Years, Halifax Says. Average prices rise 1.3% in November to hit new record high. Strong labor market and BOE interest-rate cut support market – Bloomberg
• [United Kingdom] England house prices ‘affordable’ only for richest 10% in 2022-23. Office for National Statistics data highlights property market pressures – FT