The Unassuming Economist

From C40 Cities:

“New research from C40 Cities today reveals that making the construction sector more sustainable in cities will generate multiple socio-economic benefits, including the creation of millions of green jobs.

Building greener cities: green job opportunities in clean construction, is the first major piece of work to identify the potential for cities’ workforces of adopting clean construction, presenting a compelling economic case for shifting to clean construction practices. The research, supported by Laudes Foundation and the City of Oslo, and with insights from Building and Woodworkers International, spans seven major cities: Bogotá, London, Madrid, Mexico City, Nairobi, Oslo and Seattle, to give a global perspective on how decarbonising the built environment, responsible currently for close to 40% of global CO2 emissions, can support a stable and healthy workforce and provide opportunities for greater social equity.

Researchers modelled the impact of two scenarios from 2023-2050: first, a city’s continuation of current carbon-intensive construction scenario, and second, a shift towards clean construction (defined as decarbonised, resource-efficient, resilient and socially just built environment and construction systems). The research projects the changes in job numbers and job roles, maps workforce diversity and quality of work, and calculates the investment needed for each.”

Continue reading here.

From a paper by Tobias Herbst, Moritz Kuhn, and Farzad Saidi:

“Houses are the most important asset on American households’ balance sheets, rendering the U.S. economy sensitive to house prices. There is a consensus that credit conditions affect house prices, but to what extent remains controversial, as an expansion in credit supply often coincides with changes in house price expectations. To address this longstanding question, we rely on novel microdata on the universe of mortgages guaranteed under the Veterans Administration (VA) loan program. We use the expansion of eligibility of veterans for the VA loan program following the Gulf War to estimate a long-lived effect of credit supply on house prices. We then exploit the segmentation of the conventional mortgage market from program eligibility to link this sustained house price growth to developments in the initially unaffected segment of the credit market. We uncover a net increase in credit for all other residential mortgage applicants that aligns closely with the evolution of house price growth, which supports the view that credit-induced house price shocks are amplified by beliefs.”

From a post by M. Nolan Gray:

“After a lot of hard work by activists, America’s political class has finally started to accept that we are in a housing crisis that is ruining everything. But what do we mean when we talk about a housing crisis? The reality is that housing market conditions are quite varied across the United States. There is not one single crisis, but three different varieties of housing crisis that require three different policy responses.

• Housing Shortage Crisis: These are the places where there is simply too little housing, of every variety, everywhere in the city. In these places, we urgently need to build more housing, in any form.
• Housing Inaccessibility Crisis: These are the places where housing is cheap by national standards, yet still inaccessible due to low local incomes. In these places, the near-term fix is to build subsidized deed-restricted affordable housing and expand access to housing choice vouchers. The long-term fix is to create the conditions for economic revitalization.”

Continue reading here.

On cross-country:

• House prices and rents went up in Q3 2024 – Eurostat
• House prices up by 2.6% in the euro area – Eurostat

Working papers and conferences:

• Drivers and Effects of Residence and Citizenship by Investment – IMF
• Was China’s Housing Boom a Bubble? – St Louis Fed
• Chinese Housing Market Sentiment Index: A Generative AI Approach and An Application to Monetary Policy Transmission – IMF
• House Prices and Systemic Events Over the Last Six Centuries – SSRN
• House Relistings and Economic Cycles – SSRN
• Wealth and Risk Attitude: Evidence from a House Price Hike Natural Experiment – SSRN
• House Price Markups and Mortgage Defaults – SSRN

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

• Zillow predicts 2025’s hottest real estate markets – Axios
• The Best Markets for First-Time Homebuyers in 2025 Revealed – Realtor.com
• U.S. Mortgage Rates Climb to Highest Since July. More expensive mortgages are a drag on a full-fledged housing recovery, economists say – Wall Street Journal
• Residential Construction Loan Volumes Decline Over the Third Quarter – NAHB
• The U.S. Has More Fancy Apartments Than It Is Able to Fill. Real-estate developers have built a glut of high-end properties instead of badly needed affordable housing – Wall Street Journal
• 83% of Outstanding Mortgage Debt Has a Sub-6% Rate – Realtor.com
• Housing market shift: 9 states where housing inventory is giving buyers more power. 9 states are back above pre-pandemic housing inventory levels, according to ResiClub’s monthly housing inventory report. – Fast Company
• America’s Housing Crisis: A Federal Policy Agenda for Expanding Supply and Affordability – George Bush Presidential Center
• 2nd Look at Local Housing Markets in December. Likely Sales up Year-over-year for 3rd Consecutive Month – Calculated Risk
• Part 1: Current State of the Housing Market; Overview for mid-January 2025 – Calculated Risk
• Part 2: Current State of the Housing Market; Overview for mid-January 2025 – Calculated Risk
• Residential Construction Inputs Price Growth Slows in 2024 – NAHB
• Single-Family Permits Up in November 2024 – NAHB
• Housing Inflation Moderates Amid Higher Energy Costs – NAHB
• Mortgage Applications Increase in Latest MBA Weekly Survey – MBA
• Home Price Growth Reaccelerates in Fourth Quarter – Fannie Mae

On the US—other developments:    

• ‘I Don’t Think There’s Much Left’: L.A. Fires Force Thousands to Look for Temporary Housing. Displaced Los Angeles residents face tough search for temporary and longer-term accommodations – Wall Street Journal
• Wildfires Will Deepen Housing Shortage in Los Angeles. With so many people displaced and looking for rentals, the region’s housing options could grow even scarcer and more expensive. – New York Times
• Their homes torched amid a housing crisis, L.A. residents wonder where to go. With thousands of houses destroyed by fire, the most populous county in the United States must confront the fraught logistics of rebuilding. – Washington Post
• Wealthy Homeowners and Their Insurers Turn to Hired Help to Fight L.A. Wildfires. As fires become more frequent and expensive, some insurers pay for private firefighting crews – Wall Street Journal
• LA fire victims fear new housing crisis – BBC
• Economic Toll of Los Angeles Fires Goes Far Beyond Destroyed Homes. The ongoing disaster will affect residents’ health, local industries, public budgets and the cost of housing for years to come. – New York Times
• The country needs to build homes and community like Jimmy Carter – Brookings
• Update: The Housing Bubble and Mortgage Debt as a Percent of GDP – Calculated Risk
• Housing Sentiment Finishes 2024 Higher Despite December Dip. Mortgage Rate Optimism Primary Driver of Year-over-Year Improvement – Fannie Mae
• Questioning the Housing Crisis: Recap and Wrap-Up – Cato Institute
• Three-Quarters of Americans View Homeownership as Part of the American Dream – Realtor.com
• How is climate change impacting home insurance markets? – Brookings
• Surprising Illinois City Becomes the Hottest Housing Market for the First Time – Realtor.com 
• Biden-⁠Harris Administration Takes Final Actions to Build More Housing and Bolster Renter Protections – White House
• First-Time Homeownership Became Less Affordable Across Most of the United States in Recent Years – Kansas City Fed

On Australia and New Zealand:

• [Australia] Why housing economists got it wrong on Perth, Melbourne prices – Financial Review
• [Australia] There’s an easy solution to housing affordability. But voters hate it – The Sydney Morning Herald
• [Australia] Middle-income Australians experiencing rental stress with a third of pay spent on housing, report shows. Rent has increased by 36% nationally since Covid, CoreLogic finds, which equates to an extra $171 a week on average – The Guardian

On other countries:  

• [Monaco] Monaco’s Residential Property Market Analysis 2024 – Global Property Guide
• [Netherlands] The Netherland’s Residential Property Market Analysis 2025 – Global Property Guide
• [Peru] Peru’s Residential Property Market Analysis 2025 – Global Property Guide
• [Serbia] Serbia’s Residential Property Market Analysis 2025 – Global Property Guide
• [Spain] Spain to Try to Limit Real Estate Purchases by Non-EU Residents – Bloomberg
• [Spain] Spain plans 100% tax for homes bought by non-EU residents – BBC and Bloomberg
• [Spain] El apetito de los extranjeros por comprar una vivienda en España tras la pandemia. La demanda extranjera es un pilar fundamental para explicar la fortaleza de la demanda de vivienda en el ciclo expansivo actual.– CaixaBank
• [Spain] Spain Property Firms Slam Sanchez Bid to Slug Foreigners on Tax. Plan to tax overseas home purchases seen as grandstanding. Spanish premier faces pressure to act following protests – Bloomberg
• [United Arab Emirates] Dubai’s World Beating Property Rally Shows Signs of Strain. New residents pushed property prices 20% higher in 2024. Rise in home prices is expected to slow in the coming year – Bloomberg
• [United Arab Emirates] UAE’s Residential Property Market Analysis 2025 – Global Property Guide
• [United Kingdom] The decline in remote working hits Britain’s housing market. A return to the office means a return to town – The Economist

From a paper by Edward L. Glaeser, Leonardo D’Amico, Joseph Gyourko, William Kerr, and Giacomo A.M. Ponzetto:

“We document a Kuznets curve for construction productivity in 20th-century America. Homes built per construction worker remained stagnant between 1900 and 1940, boomed after World War II, and then plummeted after 1970. The productivity boom from 1940 to 1970 shows that nothing makes technological progress inherently impossible in construction. What stopped it? We present a model in which local land-use controls limit the size of building projects. This constraint reduces the equilibrium size of construction companies, reducing both scale economies and incentives to invest in innovation. Our model shows that, in a competitive industry, such inefficient reductions in firm size and technology investment are a distinctive consequence of restrictive project regulation, while classic regulatory barriers to entry increase firm size. The model is consistent with an extensive series of key facts about the nature of the construction sector. The post-1970 productivity decline coincides with increases in our best proxies for land-use regulation. The size of development projects is small today and has declined over time. The size of construction firms is also quite small, especially relative to other goods-producing firms, and smaller builders are less productive. Areas with stricter land use regulation have particularly small and unproductive construction establishments. Patenting activity in construction stagnated and diverged from other sectors. A back-of-the-envelope calculation indicates that, if half of the observed link between establishment size and productivity is causal, America’s residential construction firms would be approximately 60 percent more productive if their size distribution matched that of manufacturing.”