Showing posts with label Global Housing Watch. Show all posts
Sunday, January 23, 2022
From Marginal Revolution:
“Paul Krugman is coming very close to admitting a) “real estate bubble” was not the best formulation, and b) Kevin Erdmann was right.”
Tweets from Paul Krugman:
“Aha. An economic mystery solved, I think (with a suggestion from Charlie Steindel). I’ve been noting that we’re currently seeing a surge in real house prices up to 2000s-bubble levels 1/
But the 2000s bubble was geographically very uneven: prices surged in cities with strict zoning, but not in places where developers were free to sprawl => elastic housing supply. This time the price rise is across the board, in fact in some cases higher in sprawl areas 2/
Eg Atlanta v Boston, on a log scale so you can see proportional differences: Boston >> Atlanta last time, if anything Atlanta > Boston now 3/
What’s going on? The answer surely involves weak supply response 4/
And that in turn points to our old friend disrupted supply chains, which have made construction very expensive 5/
Suggests that prices may eventually fall in smaller/less zoned cities, once houses can be built in large numbers 6/”
From Marginal Revolution:
“Paul Krugman is coming very close to admitting a) “real estate bubble” was not the best formulation, and b) Kevin Erdmann was right.”
Tweets from Paul Krugman:
“Aha. An economic mystery solved, I think (with a suggestion from Charlie Steindel). I’ve been noting that we’re currently seeing a surge in real house prices up to 2000s-bubble levels 1/
But the 2000s bubble was geographically very uneven: prices surged in cities with strict zoning,
Posted by 2:06 PM
atLabels: Global Housing Watch
Saturday, January 22, 2022
From Works in progress:
“Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared, before crashing by more than half between 2007 and 2012. Unsurprisingly, this extreme experience has been the subject of much research. Housing has become a critical economic, social and political issue in many cities across the high-income world. At its worst, it even threatens the very concept of living standards in high-income countries, gobbling up a third or even half of the disposable incomes of individuals and households in some locations. But it wasn’t always like this. Adjusting for inflation, the price of housing in high-income countries underwent ups and downs in the century to the 1960s but the trend was largely stable. Though the timing varies by country, it has only been in the last half-century or so that the price of housing has shot up like a hockey stick.
As the world’s largest economy, the United States has been the highest-profile market to make this transition, along with a number of other countries that have followed the same patterns. Ireland is at the extreme end. Like a Rorschach test, people look at Ireland and see whatever suits them most in making arguments about housing and economic policy.
But many of these arguments rely on simplistic myths about what happened. Contrary to many of these claims, Ireland was not a story of overbuilding caused by laissez-faire policy, or an experience that defied standard economics. Ireland built very few ghost towns – housing excesses, where they occurred, were a product of government tax policy, rather than irrational markets. And supply and demand perform very well in explaining the trends. Failing to understand these basics will mean we are susceptible to making the same mistakes all over again.
I have spent much of the last fifteen years studying the Irish housing system, following it from the heights of the Celtic Tiger bubble to the following crash and the subsequent decade of rising prices. There are, to my mind, three myths that have emerged about the Irish housing market that muddy the waters in our understanding of housing markets not just there but everywhere.”
From Works in progress:
“Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared, before crashing by more than half between 2007 and 2012. Unsurprisingly, this extreme experience has been the subject of much research. Housing has become a critical economic, social and political issue in many cities across the high-income world. At its worst,
Posted by 1:16 PM
atLabels: Global Housing Watch
From Works In progress:
“There’s a pattern that we frequently see in the development of a new technology. Initially, the practical functionality is limited by the technology itself – what’s built and used is close to the limit of what the technology is physically capable of doing. As the technology develops and its capabilities improve, there’s a divergence between what a technology can physically do and what it can economically do, and you begin to see commercialized versions that have lower performance but are more affordable. Then, as people begin to build within this envelope of economic possibility, capability tends to get further constrained by legal restrictions, especially if the new technology has any (real or perceived) negative externalities.
Cars and speed limits provide an illustrative example. The first production car, the Benz Velo, was also the fastest car, with a top speed of about 12 miles per hour. The technology quickly improved, and by the 1940s the fastest production cars were capable of traveling over 100 miles per hour, with specially built test cars achieving nearly 375 miles per hour.
“Economic” speed lagged behind this – the maximum speed of the most popular car of 1952 (the Buick Roadmaster) was 91 miles per hour. And because traveling at high speeds has negative externalities (excess crashes, pedestrian safety, etc.), states began to enact speed limits as car speed increased that further capped how fast cars would be allowed to travel. The first speed limit in the US appeared in Connecticut in 1901, limiting speed in cities to 12 miles per hour (the most popular car sold that year, the Oldsmobile Curved Dash, topped out at around 20 miles per hour).
Construction technology also shows this dynamic, with engineering, economic, and legal maximums diverging. The economic height of buildings is lower than what’s physically capable of being built, and once that economic height rises high enough we will start to see legal restrictions spring up that further limit building height.
A brief history of building height
Civilization has been putting up buildings for long enough that we find buildings hitting their economic and legal limits even in ancient history. Roman builders were capable of constructing buildings over 150 feet (48 meters) in height, or about 13 modern storeys – the Colosseum is 159 feet (48.4 meters) tall, and the Pantheon is 141 feet (43 meters) tall. Economic height lagged behind this – textual evidence suggests that Roman residential buildings (insulae) maxed out at around 7 or 8 storeys, with 5 or 6 storeys being more common. Legal limits were sometimes even lower: to reduce the risk of collapse (which was apparently not uncommon) various emperors issued edicts limiting the maximum building height. Augustus limited the height of buildings to 70 Roman feet (slightly greater than an imperial foot), which was then further restricted by Trajan to 60 feet.”
Continue reading here.
From Works In progress:
“There’s a pattern that we frequently see in the development of a new technology. Initially, the practical functionality is limited by the technology itself – what’s built and used is close to the limit of what the technology is physically capable of doing. As the technology develops and its capabilities improve, there’s a divergence between what a technology can physically do and what it can economically do,
Posted by 1:06 PM
atLabels: Global Housing Watch
Friday, January 21, 2022
On cross-country:
On the US:
On China
On other countries:
On cross-country:
On the US:
Posted by 5:00 AM
atLabels: Global Housing Watch
Thursday, January 20, 2022
From a new paper by Stephen Malpezzi:
“The global SARS-CoV-2/COVID-19 Pandemic has disrupted public health, economies, and housing markets since early 2020. The shock has called forth a number of policy responses, such as moratoria on foreclosures and evictions, attempts to regulate rents and prices, and a range of subsidies on both supply and demand sides. This paper reviews the state of housing markets and discusses the expected efficacy of alternative policy measures taken or contemplated. Recognizing the provisional nature of any paper written during a large and durable ongoing shock, suggestions for additional research are provided.”
From a new paper by Stephen Malpezzi:
“The global SARS-CoV-2/COVID-19 Pandemic has disrupted public health, economies, and housing markets since early 2020. The shock has called forth a number of policy responses, such as moratoria on foreclosures and evictions, attempts to regulate rents and prices, and a range of subsidies on both supply and demand sides. This paper reviews the state of housing markets and discusses the expected efficacy of alternative policy measures taken or contemplated.
Posted by 7:34 AM
atLabels: Global Housing Watch
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