The Unassuming Economist

From a paper by Arup Mitra, and Sabyasachi Tripathi:

“Although the focus on urbanization has shifted to developing countries, developed countries still face several challenges. In this regard, the present study proposes to investigate the capacity of cities in developed countries in terms of population size and reflects on the interaction between the city’s core and hinterland areas. In addition, the impact of cities on employment, gross domestic product, and productivity, as well as the short- and long-term relationship between them, are examined. We estimate Gini coefficients and apply panel stochastic frontier and panel cointegration approaches using data from 688 cities in 39 advanced countries to test our hypothesis. The estimated results show that the number of million-plus cities growing in developed nations varies widely, and a city’s hinterland and core vary in terms of population concentrations. The population in the core and hinterland areas have achieved saturation point. Therefore, the benefits of agglomeration economies have disappeared from these cities. It thus concurs with the S-shaped urbanization curve. The population concentration in the hinterland region is negatively impacted by territorial fragmentation and mean population exposure to particulate matter of 2.5 air pollution. There is a need to improve the density and management of environmental degradation through higher investment in making cities more productive and sustainable.”

On cross-country:

• What next for Europe’s second homes market? – FT

Working papers and conferences:

• Institutional Investors and House Prices – European Central Bank
• Interest Rates and Nonbank Market Share in the U.S. Mortgage Market. Differences in business models help explain how banks gain market share from nonbanks when interest rates are high. – Kansas City Fed
• Do Mortgage Borrowing Experiences Differ by Race and Ethnicity? Evidence from the National Survey of Mortgage Originations – Philadelphia Fed
• Do Landlords Respond to Wage Policy? Estimating the Minimum Wage Effect on Apartment Rent Prices – FED
• Monetary transmission through the housing sector – Bank of England
• An Alpha in Affordable Housing? – NBER
• 4th Workshop on Residential Housing: Balancing Sustainability and Affordability in the Building Sector – University of Zurich

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

• Higher Rents Are Coming If Interest Rates Don’t Budge. An expected drop in US apartment supply has landlords planning hikes. – Bloomberg
• Residential Construction Input Prices Increase to Start the Year – NAHB
• Q4 NY Fed Report: Mortgage Originations by Credit Score, Delinquencies Increase, Foreclosures Remain Low – Calculated Risk
• Fed Chair Warns High-Risk States Could Become Mortgage Deserts in as Little as 10 Years—Making Homeownership Impossible – Realtor.com
• Is Moving In With Parents and Assuming Their Mortgage an Easy Path to Homeownership? – Realtor.com 
• Part 2: Current State of the Housing Market; Overview for mid-February 2025 – Calculated Risk
• 3rd Look at Local Housing Markets in January – Calculated Risk
• Mortgage Rates Slide to 6.87%, Foreshadowing Stronger Housing Demand—Despite Worryingly High Inflation Report – Realtor.com
• Single-Family Permits End 2024 with Strong Momentum – NAHB
• Lawler: Early Read on Existing Home Sales in January – Calculated Risk  
• Construction Self-Employment Stable at 23% – NAHB
• Builder Confidence Falls on Tariff and Housing Cost Concerns – NAHB
• January 2025 Hottest Housing Markets – Realtor.com
• The “Neutral” Rate and Implications for 30-year Mortgage Rates – Calculated Risk
• New homes. My short term outlook for new housing starts – Matusik Missive
• NAHB Housing Sentiment Flounders, the Market Needs Lower Mortgage Rates – Mish Talk
• Housing Starts Retreat at the Start of 2025 – NAHB
• Housing Starts Decreased to 1.366 million Annual Rate in January – Calculated Risk
• Less Than One-Third of U.S. Home Purchases Were Made With Cash in 2024, a 3-Year Low – Redfin
• Zombie Foreclosures Remain a Small Fraction of U.S. Housing Inventory in First Quarter of 2025 – ATTOM
• Single-Family Built-for-Rent Construction Falls Back – NAHB  
• Completions Accelerate While Starts Slow in Mixed Results of January New-Construction Activity – Realtor.com
• Frigid temperatures chill US single-family homebuilding; tariffs a potential drag – Reuters
• Families Must Spend 38% of Their Income on Mortgage Payments – NAHB

On the US—other developments:    

• America’s Most Exclusive Suburbs Are Finally Building More Housing. States—and even historic towns like Lexington, Massachusetts—are easing real estate zoning to fight the affordability crisis. Will local support for the Yimby crowd last? – Bloomberg
• Solutions: Here’s how the Trump administration can curb housing costs – Los Angeles Times
• Elon Musk’s DOGE sends a chill through the housing market. The Trump administration is laying off 40% of FHA workers – Quartz
• Credit for Builders Tightens, Cost Results Mixed – NAHB
• YIMBYs Should Prioritze Parking Reform. This one weird trick builds lots of housing, and maybe lots of power – Cornerstone  
• How Zoning Ruined the Housing Market in Blue-State America. For a century, progressives have been making it harder to build new homes in prosperous areas. Workers, immigrants and the economy pay the price. – Wall Street Journal
• Mapped: Median Home Prices in States With Booming Growth – Realtor.com
• Across the West, a pitch to lower housing costs: Sell federal land. The issue is top of mind in Las Vegas, which could run out of room to build more homes in just seven years. – Washington Post
• A Proven Way to Ease L.A.’s Housing Crisis. States around the country are showing Southern California how to rebuild. – The Atlantic
• Forget Office Conversions. Cities Are Turning Old Hospitals Into Residential Housing. Ideal locations are typically on prime real estate near city infrastructure with built-in amenities – Wall Street Journal
• The United States Doesn’t Have a Housing Crisis. It Has Three. – M Nolan Gray
• Viral posts sow panic over D.C. housing market under Trump. They’re wrong. Social media posts on X and other platforms are gushing about a regional housing market collapse amid federal layoffs. Real estate experts say it’s all untrue. – Washington Post

On China:

• China Home Prices Show Slight Improvement But Remain in Decline. Average home prices in the 70 cities surveyed dropped 0.07% from the prior month – Wall Street Journal
• China’s leaders look to have blinked in their property face-off. They did not want to bail out indebted firms. Now they are on the verge of doing so – The Economist

On Australia and New Zealand:

• [Australia] Australia to put two-year ban on foreigners buying existing homes amid housing crunch – Reuters
• [Australia] Australia slaps 2-year ban on foreigners buying existing homes as prices soar. The restriction would likely free up around 1,800 properties per year for local buyers – South China Morning Post
• [Australia] Australia to ban foreigners from buying some homes as costs soar – The Straits Times
• [Australia] Australia’s HOUSING CRISIS was just an inflation pulse. It is over. Poof! Just like that, the housing crisis is over. Or will falling rents and prices be the next crisis? – Fresh Economic Thinking
• [Australia] Australia Housing to Stay Sluggish After RBA Cut, Stockland Says – Bloomberg

On other countries:  

• [Argentina] Javier Milei Ended Rent Control. Now the Argentine Real Estate Market Is Coming Back to Life. Milei’s deregulation demonstrates that removing government from voluntary transactions can benefit both sides. – Cato Institute
• [Canada] Canadian housing starts rise 3% in January, CMHC says – Reuters
• [Hong Kong] Is major trouble brewing for Hong Kong’s housing market? Not so fast. While financial distress is apparent, the risks must be put into context. The city’s woes are more externally driven than home-grown – South China Morning Post
• [United Kingdom] Labor to ban foreign investors from buying existing homes for at least two years, replicating Coalition policy. Critics cast doubt on effectiveness of policy, citing low volume of purchases by overseas buyers, as Labor seeks to improve housing affordability – The Guardian
• [United Kingdom] UK housing market debt falls as older generations pay off mortgages. Fewer first time buyers have been able to get on housing ladder, Savills data shows – FT
• [United Kingdom] U.K. House Prices Rose Slightly in February Ahead of Tax Increase. Sellers appear to be recognizing higher costs for buyers, with looming stamp duty changes and high competition – Wall Street Journal
• [United Kingdom] Understanding UK Housing Market Dynamics – National Institute of Economic and Social Research
• [United Kingdom] The Guardian view on new housing: Labour must not let builders dictate terms. The lack of affordable homes to buy and rent is a serious injustice. Ministers must fight for plans that put people first – The Guardian
• [United Kingdom] UK housing market starts to feel the drag from tax change, Rightmove says – Reuters
• [United Kingdom] London House Prices Failed to Grow in 2024. Average home value in British capital stagnated at £549,000. Slowdown hitting hard in super-prime areas like Kensington – Bloomberg
• [United Kingdom] UK house prices rise by most in nearly two years, ONS says – Reuters
• [United Kingdom] London registers zero house price growth for 2024. ‘Stark’ divergence between UK capital and rest of country comes as affordability pressures weigh on buyers – FT  

From a paper by Christos A. Makridis and Saurabh Mishra:

“The share of artificial intelligence (AI) jobs in total job postings has increased from 0.20% to nearly 1% between 2010 and 2019, but there is significant heterogeneity across cities in the United States (US). Using new data on AI job postings across 343 US cities, combined with data on subjective well-being and economic activity, we uncover the central role that service-based cities play to translate the benefits of AI job growth to subjective well-being. We find that cities with higher growth in AI job postings witnessed higher economic growth. The relationship between AI job growth and economic growth is driven by cities that had a higher concentration of modern (or professional) services. AI job growth also leads to an increase in the state of well-being. The transmission channel of AI job growth to increased subjective well-being is explained by the positive relationship between AI jobs and economic growth. These results are consistent with models of structural transformation where technological change leads to improvements in well-being through improvements in economic activity. Our results suggest that AI-driven economic growth, while still in the early days, could also raise overall well-being and social welfare, especially when the pre-existing industrial structure had a higher concentration of modern (or professional) services.”

From a paper by Pilu Chandra Das, and Deb Kusum Das:

“Services have been the driver of India’s overall growth since the onset of economic reforms in India and particularly beginning the 2000s. However, India’s manufacturing sector continues to draw attention despite several decades of reforms covering industrial policies and trade liberalization. The government through its several initiatives—National Manufacturing Policy as well as ‘Make in India’ program—continues to drive the sectors role in the overall growth and development. The sector is targeted to contribute around 25% of GDP by 2025 as against its current 16% share. In the recent past, Indian manufacturing has attained a sharp rise in growth and this augurs well for a sector that has seen stagnancy in its share of GDP in the last several decades. The lack of jobs in organized manufacturing has so far failed India’s industrial objectives and add to that is the large number of people employed in informal manufacturing activities as well has remained a perennial challenge to development needs. The productivity performance of manufacturing industries has been well documented and continues to exhibit low productivity growth. A recent study by Das et al. (The World Economy: Growth or Stagnation? Cambridge University Press, Cambridge, pp. 199–233, 2016) however finds labour-intensive manufacturing outperforming non-labour-intensive goods during the period 2000–15 and this is important when we have evidence of declining labour intensity even in labour-intensive manufacturing (Sen and Das in Economic and Political Weekly 50(23):108–115, 2015). Several challenges remain if productivity is to be improved. Most critics would point to the labour market rigidities for the inefficiency in the manufacturing sector, but there remains several issues beyond simple labour market reforms that need to be addressed—particularly those related to skill formation and its impact of labour quality. The present study would cover the manufacturing industries for the period 2000–2015 in an attempt to understand the productivity dynamics in manufacturing sector and its relation to employment. Using a neoclassical growth accounting technique and the India KLEMS dataset, we would examine the manufacturing performance both at the aggregate-level as well as 13 disaggregated industries and present an industry-level perspective on manufacturing performance. The period of study would also take into account the several phases of the Indian economy including pre-global slowdown, slowdown and recovery phase. The study would address some of the possible determinants of manufacturing performance which need attention if the stagnancy of manufacturing share in overall GDP is to be reversed.”

From a paper by Amit Roy, Pu Chen, and Willi Semmler Sr:

“In European countries carbon pricing is often viewed as a primary strategy to combat climate change and climate risks by reducing carbon emissions and driving investment into cleaner energy sources. Decarbonization has also been suggested by directed technical change, which implements innovative renewable energy technology. We study the eectiveness of both policies for selected Northern EU countries. In a model-based investigation we rst compare optimizing and behavioral drivers of decarbonization with a focus on the two decarboniza-tion policies. Econometrically we employ Local Projection and the VAR method to explore the eects of both policies, carbon tax and directed technical change on GDP and emission reduction. Our results show that though both policies are needed signicant technology-oriented policy actions on the supply side of renewable energy appear to be required to accelerate the decarbonization of the economies. We want to thank Tato Khundadze for extensive research assistance. We also want to thank two reviewers of the article and the editors of the journal for extensive comments.”