The Unassuming Economist

From the IMF’s latest report on Canada:

“Housing market imbalances are a key source of systemic risk and can adversely affect housing affordability. This paper utilizes a stylized model of the Canadian economy that includes policymakers with differing objectives—macroeconomic stability, financial stability, and housing affordability. Not surprisingly, when faced with multiple objectives, deploying more policy instruments can lead to better outcomes. The results show that macroprudential policy can be more effective than policies based on adjusting propertytransfer taxes because property-tax policy entails excessive volatility in tax rates. They also show that if property-transfer taxes are used as a policy instrument, taxes targeted at a broader-set of homebuyers can be more effective than measures targeted at a smaller subset of homebuyers, such as nonresident homebuyers.”

On cross-country:

• 500 Years of Urban Rents, Housing Quality and Affordability – Research Gate

On the US:

• Seventh annual AEI-CRN conference on housing markets and finance: Supply, demand, and pro-cyclical forces – American Enterprise Institute
• Lynn Fisher on affordable housing and US housing markets – American Enterprise Institute
• Changes in Supply and Demand at Various Segments of the Rental Market: How Do They Match Up? – Harvard Joint Center for Housing Studies
• Creepin’ it Real: Haunted Neighborhoods and Their Home Values – Trulia
• American Abodes: Where International House Hunters are Searching for Homes – Trulia
• Why there’s no bubble in the US housing market – AsianInvestor
• Intergenerational Homeownership – Urban Institute
• Mortgage Rates Are Pushing U.S. Homes Out of Reach – Bloomberg
• How Airbnb’s Tech Is Impacting People’s Fundamental Human Rights – Forbes
• No, rent control doesn’t always reduce the supply of housing – Los Angeles Times
• Rent Control Returns: Thoughts and Evidence – Conversable Economist

On other countries:

• [China] Local capital scarcity and industrial decline caused by China’s real estate booms – VOX
• [Greece] Seeking a bargain, and taste of the good life, Chinese buy Greek homes – Reuters
• [Singapore] Singapore’s Public Housing, Envy of World, Hits Rough Patch – Bloomberg
• [Spain] Little Caracas, el barrio de lujo que se ha instalado en el centro de Madrid – GQ
• [United Kingdom] Curtain comes down on Help to Buy – Financial Times

Photo by Aliis Sinisalu

On cross-country:

• Housing expenditures and income inequality: Shifts in housing costs exacerbated the rise in income inequality – VOX
• Cost of greener homes too high, Europe tells ING survey – ING
• Report on UN Special Rapporteur on the Right to Housing – National Economics & Social Rights Initiative

On the US:

• What does economic evidence tell us about the effects of rent control? – Brookings
• Star Tribune Op-Ed: Affordable housing crisis demands more supply – Federal Reserve Bank of Minneapolis
• Computer Vision and Real Estate: Do Looks Matter and Do Incentives Determine Looks – NBER
• New Book Asks: What It Would Take to Foster Communities of Inclusion in an Era of Inequality? – Harvard Joint Center for Housing Studies
• California has a housing crisis, and Californians seem confused about how to solve it – American Enterprise Institute
• Home Sales Are Dropping — Could The Housing Market Finally Be Cooling Off? – NPR
• Tax practices that amplify racial inequities: Property tax treatment of owner-occupied housing – D.C. Policy Center

On other countries:

• [Brazil] Brazil’s home buyers bet on the ballot – Financial Times
• [Germany] Germany’s housing crisis fuels black market for refugees – Reuters
• [Ireland] Is Dublin’s property market heading for a soft landing? – Financial Times
• [New Zealand] Ban on foreign buyers seen poor answer to New Zealand’s housing shortage – Reuters
• [Spain] Spanish banks hit by supreme court ruling on mortgage fees – Financial Times

Photo by Aliis Sinisalu

On cross-country:

• Homeownership motivation, rationality, and housing prices: Evidence from gloom, boom, and bust‐and‐boom economies – International Journal of Finance & Economics

On the US:

• Assessing Housing Risk – Money and Banking
• Local regulatory responses during a regional housing shortage: An analysis of rezonings in Silicon Valley – Land Use Policy
• HUD can’t fix exclusionary zoning by withholding CDBG funds – Brookings
• Housing Market Is Raising Serious Red Flags – Bloomberg
• Promoting Luxury Housing with an Ironic Twist – Institute for Policy Studies
• Homebuilding Isn’t What It Used to Be – Bloomberg
• Reconciling the back to the city thesis with sustained suburban growth – Harvard Joint Center for Housing Studies
• Airbnb and Neighborhood Conflict – Cato Institute
• Slower Growth Anticipated in Home Remodeling – Harvard Joint Center for Housing Studies

On other countries:

• [Austria] Austrian Housing Policy – Dublin Economics
• [Canada] Condo Flippers Aren’t the Vancouver and Toronto Housing Culprits – Bloomberg
• [China] China homeowners stage protests over falling prices – Financial Times
• [United Kingdom] No, the housing crisis will not be solved by building more homes – Financial Times

Photo by Aliis Sinisalu

From Money and Banking:

“Housing debt typically is on the short list of key sources of risk in modern financial systems and economies. The reasons are simple: there is plenty of it; it often sits on the balance sheets of leveraged intermediaries, creating a large common exposure; as collateralized debt, its value is sensitive to the fluctuations of housing prices (which are volatile and correlated with the business cycle), resulting in a large undiversifiable risk; and, changes in housing leverage (based on market value) influence the economy through their impact on both household spending and the financial system (see, for example, Mian and Sufi).

In this post, we discuss ways to assess housing risk—that is, the risk that house price declines could result (as they did in the financial crisis) in negative equity for many homeowners. Absent an income shock—say, from illness or job loss—negative equity need not lead to delinquency (let alone default), but it sharply raises that likelihood at the same time that it can depress spending. As it turns out, housing leverage by itself is not a terribly useful leading indicator: it can appear low merely because housing prices are unsustainably high, or high because housing prices are temporarily low. That alone provides a powerful argument for regular stress-testing of housing leverage. And, because housing markets tend to be highly localized—with substantial geographic differences in both the level and the volatility of prices—it is essential that testing be at the local level.”

Continue reading here.