The Unassuming Economist

From Nishtha Anushree at Swarajya:

“The Nobel Prize 2024 in Economic Sciences has been awarded to Daron Acemoglu, Simon Johnson and James A Robinson “for studies of how institutions are formed and affect prosperity.”

The Royal Swedish Academy of Sciences has chosen the awardees of the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for demonstrating the importance of societal institutions for a country’s prosperity.

The laureates’ model for explaining the circumstances under which political institutions are formed and changed has three components. The first is a conflict over how resources are allocated and who holds decision-making power in a society (the elite or the masses).

The second is that the masses sometimes have the opportunity to exercise power by mobilising and threatening the ruling elite; power in a society is thus more than the power to make decisions.

The third is the commitment problem, which means that the only alternative is for the elite to hand over decision-making power to the populace.

“The introduction of inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for the people in power,” the laureates say.

The laureates have also developed an innovative theoretical framework that explains why some societies become stuck in a trap with what the laureates call extractive institutions, and why escaping from this trap is so difficult.

They have added a new dimension to previous explanations for the current differences in the wealth of countries around the globe. One of these relates to geography and climate.

Their insights regarding how institutions influence prosperity show that work to support democracy and inclusive institutions is an important way forward in the promotion of economic development.”

From McKinsey & Company:

“Daron Acemoglu and Simon Johnson of MIT, and James Robinson of the University of Chicago were awarded the 2024 Nobel Memorial Prize in Economic Sciences for their research on how societal institutions shape a country’s prosperity. “I believe that the political economy of growth, how we make it happen, what sort of institutions we have to have in order to undergird growth, who benefits from growth, how you regulate growth, and technology, automation, AI, the direction of technological change—those are intimately connected,” said Acemoglu in a 2021 episode of the McKinsey Global Institute’s Forward Thinking podcast with Michael Chui.

For more on the role of inequality in economics, check out McKinsey Publishing interviews with Nobel Prize winners Angus Deaton, Robert Solow, and Richard Thaler, and insights from McKinsey’s Anu Madgavkar, Sven Smit, Kweilin Ellingrud, Tracy Francis, and Asutosh Padhi.”

On cross-country:

• Taming the World’s Affordable Housing Crisis – Insead
• The EU’s plan to make housing more affordable. The European Commission has a plan to tackle the housing squeeze even as it acknowledges that its powers are limited. – Politico
• Why does the Anglosphere Suck at Housing? Speaking English is part of the problem – Home Economics
• Global house price growth accelerates. House prices across our 56-country basket rose by 3.3% in the 12 months to the end of June, with prices increasing by 1.9% over the past three months alone – Knight Frank

Working papers and conferences:

• Monetary policy transmission: why consumers’ housing situations matter. – European Central Bank
• Long-term fixed-rate mortgages through an international lens: could they lead to higher home ownership? – Bank of England
• House Price Experiences and Consumer Spending – SSRN
• Housing Policy, Homeownership, and Inequality – SSRN

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

• Why have mortgage rates fallen, and where are they headed? – Brookings
• US 30-Year Mortgage Rate Climbs by Most in More Than a Year – Bloomberg
• Asking Rents Mostly Unchanged Year-over-year – Calculated Risk
• Why Mortgage Rates Haven’t Fallen Since the Fed Cut. Would-be home buyers anticipating more relief from the Fed might be waiting a while – Wall Street Journal
• 1st Look at Local Housing Markets in September. Significant Regional Differences for Active Inventory – Calculated Risk
• NYC Apartment Renters Get a Break But Bargains Remain Elusive. Manhattan median is $200 below record after string of declines. Leases jump, signaling the market’s still fiercely competitive – Bloomberg
• Remodeling Market Sentiment Dips in Third Quarter – NAHB
• Moody’s: Apartment Vacancy Rate Unchanged in Q3; Office Vacancy Rate at Record High – Calculated Risk
• Housing Confidence Inches Higher Amid Record-High Optimism Toward Mortgage Rates. Renter Sentiment Also Up, Including Share Expecting Rates to Fall – Fannie Mae
• Mortgage rates are rising again. An uptick in rates slowed total loan applications after several months of growth – Quartz
• Despite Housing Shortage, America Has 5.6 Million Vacant Homes—What Gives? – Realtor.com  

On the US—other developments:    

• Removing Barriers to Abundant, Affordable Housing. InsideSources published an op-ed from Kevin DeGood about the role that state and local governments play in America’s housing affordability crisis. – Center for American Progress
• Americans Recognize Housing Affordability Crisis, Support New Policies To Fix the Market and Build More Homes. New survey data show housing affordability is a salient national issue. – Center for American Progress
• Contra J.D. Vance and Tim Walz, Housing Should Be a ‘Commodity’. Housing is unaffordable because regulations have prevented its commodification. – Reason
• Why YIMBYs like Kamala Harris – Axios  
• The link between immigration and housing costs isn’t as obvious as it seems – Axios
• Gavin Newsom’s blunt instrument on housing – Politico 
• The Week in Review. Week of Sept 30th — Payrolls pop – Home Economics
• San Francisco’s mayoral election defined by housing crisis and shift to right – Reuters
• Housing costs are rising. How do Trump and Harris plan to tackle them? – NPR
• Manufactured Homes: Shipments, Prices, and Characteristics in 2023 – NAHB
• ICE Mortgage Monitor: Insurance Costs “Spike”, Especially in Florida – Calculated Risk
• See Where the Housing Market Could Change the Most as Mortgage Rates Drop – Realtor.com
• Soaring Insurance Costs Are Menacing Owners of Big Buildings, Too. Struggling landlords and developers are seeking leeway on coverage from their lenders — mostly in vain. – New York Times
• State of Local Homeownership Prior to the Election – NAHB 

On Australia and New Zealand

• [Australia] Downsizing How Australia’s housing crisis opens door for eager Asian investors. The factors in Australia’s affordability crisis can be seen elsewhere in Asia, making it important for investors not to overlook their own markets – South China Morning Post
• [New Zealand] Difficult mortgage decisions for borrowers likely to continue – CoreLogic

On other countries:  

• [Canada] Buying a home gets a tad more affordable as rates drop – RBC
• [Canada] Can private real estate help lead Canada out of the housing crisis? – Bloomberg
• [Korea] Korea Touts Progress in Cooling Real Estate Ahead of BOK Meeting. Finance Ministry comments just days before Bank of Korea meets. BOK has delayed cutting interest rates on concerns about debt – Bloomberg
• [Korea] Cooling in Seoul’s Apartment Market Pauses Ahead of BOK Meeting. High-frequency data show top properties demand still strong. Government continues to pledge to rein in household debt – Bloomberg
• [Kuwait] Why Housing Prices in Kuwait Keep Going Up? Unveiling the Drivers Behind the Crisis – LSE
• [Hong Kong] Hong Kong property prices have ‘bottomed out’ and will ‘rebound slowly’, sector leader says. Recent strength in stock market can help drive economic recovery and boost property sector, head of developers’ association says – South China Morning Post
• [United Kingdom] UK property market strengthens, pressure on renters intensifies, RICS says – Reuters
• [United Kingdom] UK house prices rising for first time in two years – Yahoo Finance

On cross-country:

• The house-price supercycle is just getting going. Why property prices could keep rising for years – The Economist
• House prices and rents went up in Q2 2024 – Eurostat
• House prices up by 1.3% in the euro area – Eurostat
• Eurozone house prices rise for first time in more than a year. Annual increase of 1.3% in second quarter points to gradual recovery of region’s housing market – FT
• The housing crisis is global. What are other countries doing about it? Australia is not the only country facing a housing crisis. Alan Kohler takes us on a whistle-stop tour of five governments trying to make homes more affordable – The Guardian

Working papers and conferences:

• Racial Differences in the Total Rate of Return on Owner-Occupied Housing – SSRN
• Disaster Risk and Rising Home Insurance Premiums – NBER
• Psychological Effects of Air Pollution: Evidence from House Viewings – SSRN
•  Did Brexiteers Get What They Voted for? Evidence from the Housing Market – SSRN
• Why higher house prices lead to higher borrowing. The UK housing market has experienced a dramatic rise in house prices and mortgage debt over recent decades, both of which have outpaced average income growth. New research shows that much of the increase in mortgage debt can be attributed to homebuyers being compelled to borrow more in order to afford adequately sized homes. – LSE

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

• US Home Price Insights –  October 2024 – CoreLogic
• Fannie and Freddie: Single Family Serious Delinquency Rate Ticked Up in August – Calculated Risk
• US housing market: Home prices climb to new record high in July – S&P Global
• Final Look at Local Housing Markets in August and a Look Ahead to September Sales – Calculated Risk
• Mortgage Rates Continue Downward Trend in September – NAHB
• Freddie Mac House Price Index Increased Slightly in August; Up 3.7% Year-over-year. Over the last 6 months, the seasonal adjusted index has increased at a 1.5% annual rate – Calculated Risk
• Private Residential Construction Spending Falls for Third Straight Month – NAHB
• FHFA’s National Mortgage Database: Outstanding Mortgage Rates, LTV and Credit Scores – Calculated Risk
• Refinancing Activity Continues to Climb in September – NAHB
• Majority of Americans Still Feel Locked in by Mortgage Rates—With More Than Half of Borrowers’ Rates Below 4% – realtor.com
• 84% of Outstanding Mortgage Debt has a Sub-6% Rate – realtor.com
• September 2024 Monthly Housing Market Trends Report – realtor.com

On the US—other developments:    

• Edward Glaeser on Zoning, Land Use Regulation, and Urban Economics – Hoover Institution
• How We Unintentionally Created the Affordable Housing Crisis – New York Times
• Making housing more affordable – Brookings
• Miami Housing Is Expensive. Just Don’t Call It a Bubble. The Florida city tops this year’s UBS ranking of global cities with elevated home prices. But the market’s fundamentals may not be as weak as they seem. – Bloomberg
• Housing market shift: Here’s where homebuyers are gaining power fast. Buyers have gained some leverage in most resale markets over the past year, with some markets even becoming buyer’s markets. – Fast Company
• In Las Vegas, housing could make or break the battle for the White House. Nevada, once known for its low living costs, has seen house prices soar and rents climb – can Trump take advantage? – The Guardian
• In a Florida Town Ravaged by Storms, Homeowners All Want to Sell. Ballooning home insurance costs and the perennial threat of violent storms hit Tampa Bay housing market hard – Wall Street Journal
• The San Diego infinite housing glitch. How a bonus ADU program allows ‘granny towers’ in gardens – The Work in Progress Newsletter
• That Luxury Home Comes With an Ocean View—and Surging Insurance Costs. A lot of high-end real estate is in parts of the country that have become hotbeds for climate disasters in recent years – Wall Street Journal
• J.D. Vance Actually Does Understand How Costs Get Passed Along the Supply Chain. Vance says higher energy prices make building houses more costly. What, then, do tariffs on steel and lumber do? – Reason
• Three Principles for a Rental Assistance Guarantee – Center on Budget and Policy Priorities
• Housing is having a moment. It’s not enough to fix wildfire insurance – Politico  

On China:

• China Developers Offer Deals Betting Home Prices Will Hit Bottom. Moves come as policymakers unveil aggressive housing stimulus. Biggest builder to give refunds if prices drop after purchase – Bloomberg
• China announces new measures to arrest housing slump and boost growth. Benefits to rise for poorest and local authorities to be given powers to intervene in real estate markets – The Guardian
• China’s Politburo Supercharges Stimulus With Housing, Rates Vows. Politburo calls for measures to stop property market decline. Pledge to ensure fiscal spending among steps signaling urgency – Bloomberg
• Can China’s stimulus bazooka repair confidence, income deficit in housing market? Fitch analyst sees more support measures next quarter to ensure Beijing’s latest stimulus bazooka achieves its aims – South China Morning Post
• China Moves to Cut Mortgage Rates to Revive Housing Market – Bloomberg
• China Removes Curbs on Home Buyers, Sparking Stock Market Surge. After seeing prices decline for years, Chinese officials have made a burst of policy changes aimed at making it easier to buy homes. – New York Times
• China’s Housing Glut Collides With Its Shrinking Population. Many cities are stuck with empty homes that they will likely never fill, adding to the country’s economic woes – Wall Street Journal

On Australia and New Zealand

• [Australia] Downsizing Baby Boomers Face Apartment Shortages in Sydney – Bloomberg
• [New Zealand] House prices will stop falling soon – Corelogic – RNZ
• [New Zealand] New Zealand House Prices Continue to Retreat Despite Rate Cuts – Market Watch
• [New Zealand] Rate cuts haven’t pumped up house prices yet – Core Logic

On other countries:  

• [Canada] In Canada’s hot small-city housing markets, rent-to-own is on the rise – Globe and Mail
• [Canada] Toronto Home Prices Fall for Second Month as New Listings Surge. Buyers are gaining more negotiating power, market analyst says. Economists expect central bank to continue to lower its rate – Bloomberg
• [Denmark] Denmark faces EU court questions on housing policy, racism – Reuters
• [Hong Kong] Hong Kong needs to fix its student housing supply. The private student accommodation market shows great potential, but repurposing existing properties will only go so far to satisfy growing demand – South China Morning Post
• [Ireland] House prices in Dublin rise 8.4% over past 12 months. Property advisers DNG expect resale market in the capital to reach 9% in 2024 – The Irish Times
• [Ireland] House prices are now 37% higher than at start of Covid pandemic in 2020. Prices rise 3% in third quarter as shortage of second-hand homes for sale bites, according to Daft report – The Irish Times
• [Korea] Seoul’s Apartment Market Cools More Ahead of BOK Rate Decision – Bloomberg
• [United Kingdom] UK Home Price Rise Most Since February, Nationwide Says. Mortage lender’s gauge shows market bounced back in September. Mortgage approvals rise to highest level since September 2022 – Bloomberg
• [United Kingdom] UK house prices hit highest annual growth since 2022. Nationwide says yearly rise in house prices increased by 3.2% in September putting the average home at £266,094 – The Guardian
• [United Kingdom] Yimbys hear this – simply building more homes won’t solve our housing crisis. The ‘yes in my back yard’ voices are getting louder, but housebuilding quality is more important than quantity – The Guardian
• [United Kingdom] The Recovering UK Housing Market: Who Benefits? Prices and sales are rising. That’s good news for a wide range of sectors, not just builders. – Bloomberg
• [United Kingdom] U.K. Home Sales Soar as Mortgage Rates Ease. September’s agreed sales were 25% higher on year – Wall Street Journal
• [United Kingdom] UK house sales rise at fastest pace in three years, data shows. Lower interest rates spur rise in buyer demand in September, says Zoopla – FT

On cross-country:

• Global Real Estate Bubble Index 2024. Our analysis of residential property prices in 25 major cities shows bubble risk in housing markets declined further in 2024. Miami now shows the highest bubble risk for cities in this study, followed by Tokyo. – UBS
• Miami Tops UBS Property Bubble Risk as Global Imbalances Decline. Global housing markets waiting for lower interest rates. Home prices in many cities have bottomed out, UBS says – Bloomberg
• Residential Real Estate Regional Data Overview. Real estate data, both current and historical, spanning 69 countries and their respective regions. – Global Property Guide

Working papers and conferences:

• 13th Annual Housing Center Conference on November 20 – American Enterprise Institute
• Satellite-Based Census of Residential Buildings: Application for Climate Risk Assessment – IMF
• Housing Markets Under the Microscope: City by City, Year by Year – Philadelphia Fed
• A Closer Look at Housing Market Actors’ Dynamics in Responses to Sea Level Rise in Miami-Dade, Florida – SSRN

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

• Case-Shiller: National House Price Index Up 5.0% year-over-year in July. Over last 3 months, FHFA Index has increased at a 0.7% Annual Rate – Calculated Risk
• Inflation Adjusted House Prices 1.5% Below 2022 Peak. Price-to-rent index is 7.8% below 2022 peak – Calculated Risk
• US monthly house prices edge up in July – Reuters
• Home Price Growth Slowing – NAHB
• MBA Statement on the “ROAD to Housing Act” – Mortgage Bankers Association
• First-Time Buyer Share for New Homes is Slipping – NAHB
• Impact of Short-Term Rental Regulation in Chicago – NAHB
• Bedrooms in New Single-Family Homes in 2023 – NAHB
• August 2024 Rental Report: Rental Affordability Improved From a Year Ago – realtor.com
• Top 10 Cities Where Homes Sell for the Most Below the Asking Price Ago – realtor.com
• Deregulation Can Fix the Housing Crunch. Increasing the supply of housing requires looser rules and fewer bureaucratic delays. – Reason
• The home mortgage refinance mini-boom – Axios
• US Mortgage Rates Fall Again, Triggering Wave of Refinancings – Bloomberg
• Existing Home Sales Slide Despite Lower Mortgage Rates – NAHB
• New Home Sales Fall in August – NAHB
• US new home sales fall less than expected; median house price declines – Reuters
• New-Home Sales Dip in August Despite Easing Mortgage Rates and Listing Prices – realtor.com  
• New Home Sales Decrease to 716,000 Annual Rate in August. Median New Home Price is Down 9% from the Peak – Calculated Risk
• More New Listings at Major Climate Risk Now Than Five Years Ago – Zillow

On the US—other developments:    

• How the cost housing became so crushing. The roots of the property crisis run deep and have proved very hard to fix – New York Times
• How Higher Property Insurance Premiums Mirror Climate Risk. Homeowner’s insurance premiums have risen by a third between 2020 and 2023 as insurers passed on higher reinsurance costs, according to a new study co-authored by Wharton’s Benjamin Keys. – Wharton
• The Kamala Harris Plan for More Housing Shortages. Her plan would stimulate demand, not supply, and redistribute wealth to the sellers of existing homes. – Wall Street Journal
• What do we know about Kamala Harris’ economic plans on taxes, housing, manufacturing? – Reuters
• Unlocking the Hidden Power of Zoning, for Good or Bad. In her new book, lawyer and architect Sara Bronin shows how land use regulations shaped US cities and makes a case for using these rules for progressive aims. – Bloomberg
• Has the Fed rate cut thawed the housing markets? Northeastern experts say play the long game – Northeastern
• New policies needed to boost homeownership. Interest rate cut was the first step. More are needed. – Washington Post
• Boomers Own 38% of America’s Homes—but More Than Half Never Plan To Sell – Realtor.com
• Fed Rate Cut 101: A Housing Economist Reveals Everything Homebuyers and Sellers Need To Know – Realtor.com
• Custom Home Building Share Declines in 2023 – NAHB
• Why Jerome Powell says the Fed alone can’t fix the broken housing market. According to Powell, ‘The real issue with housing is that we have had, and are on track to continue to have, not enough housing.’ – Fast Company
• Central Planning Will Not Solve California’s Housing Shortage – Cato Institute 
• Home Ownership Slightly More Affordable Across U.S. in Third Quarter but Still Difficult for Average Workers – ATTOM

On China:

• China’s Politburo Supercharges Stimulus With Housing, Rates Vows. Politburo calls for measures to stop property market decline. Pledge to ensure fiscal spending among steps signaling urgency – Bloomberg
• China’s Homeowners Are Outraged. The Property Market Is Still a Mess. – Barron’s
• Economists Urge China to Ramp Up Housing Rescue to Propel Growth. Most analysts favored property rescue as best stimulus option. Chinese government-led package has been beset by slow progress – Bloomberg
• China Cuts Interest Rates and Mortgage Down Payments. The country’s central bank also freed commercial banks to lend more money in a package of moves aimed at rekindling growth in a stagnant economy. – New York Times    

On Australia and New Zealand

• [Australia] Axing negative gearing won’t cause a rental crisis. Here’s the maths. When an investor outbids an owner-occupier, they do add to the supply of rental houses – but that’s only half the story – The Guardian
• [Australia] ‘Stop doing dumb stuff,’ economist warns as housing affordability in Australia slips. Saul Eslake says decades of ‘bad policies’ have inflated demand as report finds about 20% of households effectively ‘locked out’ of the market – The Guardian
• [Australia] Housing stoush ramps up as Labor accuses Greens MPs of opposing Brisbane projects. Bill Shorten accuses Greens of ‘unholy alliance’ with Coalition to delay government’s Help to Buy scheme – The Guardian
• [Australia] Why has Australia fallen so short on housing targets – and how can it get out of the crisis? Amid rising costs and a lack of productivity in the construction sector, some say relaxing building standards could help. But others aren’t convinced – The Guardian
• [Australia] RBA Set to Extend Rate Pause as Housing Crisis Props Up Prices – Bloomberg
• [Australia] Is Australia’s Unaffordable Housing a Foreign Policy Problem? A “whole-of-nation” approach to foreign policy would understand how each element of domestic policy is critical to enhancing the country’s overall capabilities and international power – including housing. – Diplomat
• [Australia] These newly minted million-dollar suburbs are breaking records – Financial Review

On other countries:  

• [Argentina] Argentina Scrapped Its Rent Controls. Now the Market Is Thriving.
• President Javier Milei’s fiscal ‘shock therapy’ yields lower rents overall, but some people feel squeezed – Wall Street Journal
• [Germany] German home prices decline in Q2 but show some stabilization – Reuters
• [Hong Kong] Hong Kong’s property market set to revive gradually as rate cuts buoy sentiment, demand. The first rate cut should lure more homebuyers back to showrooms, and prices are appealing after a 25 per cent slump from peak, analysts say – South China Morning Post
• [Hong Kong] There is no quick recovery from Hong Kong’s property slump. Despite last week’s interest rate cut, new home sales have only fallen further – FT
• [Ireland] Rent Cap Locks Billions of Euros Out of Irish Housing, CBRE Says – Bloomberg
• [Italy] Even in Its Priciest Neighborhoods, Buying in Rome Remains a Bargain. Compared with other luxury housing markets in Europe, buyers get more bang for their buck in Italy’s capital – Wall Street Journal
• [Korea] South Korea’s central bank chief warns over Gangnam-style housing boom. Rhee Chang-yong calls for caps on university admissions from upmarket capital districts to check price growth – FT
• [Korea] Bank of Korea May Cut Before Housing Cools 100%, Member Says. Board member points to need to aid private consumption. BOK keeps investors guessing over timing for rate cut – Bloomberg
• [Korea] Seoul Apartment Price Growth Slows in Early Sign of Property Cooling as BOK Mulls Rate. Bank of Korea monitoring home-price data ahead of decision. Seoul apartments represent major driver of household debt – Bloomberg
• [Latvia] Latvia Residential Real Estate Market Analysis 2024 – Global Property Guide
• [Lithuania] Lithuania Residential Real Estate Market Analysis 2024 – Global Property Guide
• Dutch Home Prices Jump Most in Two Years as Shortage Lingers. August house prices increased 11% compared to prior year. Average transaction price of existing home was €466,207 – Bloomberg

• [Slovakia] Slovakia Residential Real Estate Market Analysis 2024 – Global Property Guide
• [Taiwan] Taiwan Raises RRR Again to Cool Off Property Market, Holds Rate. Central bank boosts amount of funds banks must hold in reserve. Housing costs in Taiwan have risen for 23 straight quarters – Bloomberg
• [United Kingdom] Surging UK Home Prices Pose a ‘Significant Challenge,’ Scottish Widows Says – Bloomberg
• [United Kingdom] Angela Rayner hints at major social housing announcement. Deputy prime minister tells Labour conference she expects chancellor to make promise on building at spending review – The Guardian
• [United Kingdom] Labour, beware: Britain’s housing crisis is driving voters towards populism. Whenever I talk to people who are bitterly disconnected from politics, they raise the lack of decent homes. That’s the stark truth the party needs to address – The Guardian
• [United Kingdom] Labour’s housing plans are flawed – LSE