The Unassuming Economist

From the IMF’s latest report on Malaysia:

On cross-country:

• What’s causing the global rental squeeze? As pandemic restrictions ease, a frenzied scramble for rented property is leading to spiralling prices, bidding wars — and despair – FT

On the US:    

• Lessons learned from housing policy during COVID-19 – Brookings
• Another housing bubble? ‘We’re skating close to one,’ says Realtor.com economist – Fortune
• Is the US housing market headed for a price correction? – The Hill
• The odds of a home price decline hitting your local housing market, as told by one interactive chart – Fortune
• Don’t Count On a Housing Slowdown to Improve Affordability. This would be a downturn engineered by the Federal Reserve, and rising mortgage rates in a tight market will generally just make buying a home more expensive. – Bloomberg
• Home Prices Have Begun Falling: Here Are the Cities Where They’re Down the Most – Realtor
• The Hottest Places to Live Now Are Often the Most Affordable. In The Wall Street Journal/Realtor.com Emerging Housing Markets Index, Rapid City, S.D., metro area ranks No. 1 for quarter – Wall Street Journal
• Red Hot Remodeling Growth Expected to Ease into 2023 – Harvard Joint Center for Housing Studies
• U.S. homebuilders to feel pricing pinch from rising mortgage rates, inflation – Reuters
• Pittsburgh Will Force Private Developers To Build Affordable Housing. These “inclusionary zoning” policies have a record of increasing housing costs and suppressing new housing supply. – Reason
• Some Home Buyers Turn to Alternative Financing as Other Options Dwindle. A new study found that even creditworthy shoppers may be unable to find traditional mortgages. But the arrangements often lack typical consumer protections. – New York Times
• Why the Road Is Getting Even Rockier for First-Time Home Buyers. Investors and corporations are buying up houses and turning them into rental properties. In Charlotte, N.C., that is adding to the hurdles facing would-be buyers navigating a brutal market. – New York Times
• It’s Not That Simple: Housing shortage, a review – The Berkshire Edge
• The burgeoning role of ibuyers in the housing market – Real Estate Economics
• Housing demand and remote work – San Francisco Fed  
• Redesigning the housing market to build an architecture of equality – Brookings
• Neighborhood Choice After COVID: The Role of Rents, Amenities, and Work-From-Home – NBER

On other countries:  

• [Canada] Canada open to more measures to curb housing speculation, minister says – Reuters
• [New Zealand] New Zealand’s cooling housing market means opportunity for some, angst for others – The Guardian
• [New Zealand] NZ cenbank to finalise debt servicing curbs framework for mortgage lending by late 2022 – Reuters
• [Singapore] Singapore Home Prices Grow at Slowest Pace in Almost Two Years. Private home values inched 0.7% higher from previous quarter. Slowdown comes as curbs on property rein in housing boom – Bloomberg
• [Singapore] Singapore’s Housing Shortage Risks Bid to Cool Home Prices. Tight supply, resilient demand may undermine cooling measures. Developers have little incentive to lower prices, analysts say – Bloomberg
• [United Kingdom] House prices, the distribution of household debt and the refinancing channel of monetary policy – IDEAS
• [United Kingdom] U.K. House Prices, Meet the Cost-of-Living Crisis. Britain’s mortgage market is signaling fears of a recession. But big falls in property values look unlikely now that housing is the asset class of the well-off. – Bloomberg
• [United Kingdom] Magic Wandsworth: house prices rise but homes do a disappearing act – FT

From a new work by John Mondragon (Federal Reserve Bank of San Francisco) and Johannes Wieland (UCSD and NBER):

“What explains record U.S. house price growth during the Covid-19 pandemic? We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period. Using variation in remote work exposure across U.S. metropolitan areas we estimate that an additional percentage point of remote work causes a 0.90 percent increase in house prices after controlling for negative spillovers from migration. This cross-sectional estimate combined with the aggregate shift to remote work implies that remote work raised aggregate U.S. house prices by 14.6 percent. Using a model of remote work and location choice we argue that this estimate is a lower bound on the aggregate effect. Our results imply that the evolution of remote work is likely to have large effects on the future path of house prices and inflation.”

From a new work at Brookings by Kris Gerardi, Lauren Lambie-Hanson, Paul Willen, Laurie Goodman, and Susan Wachter:

“Evidence on housing policy

• The national forbearance mandate, foreclosure moratorium, enhanced Unemployment Insurance (UI), and Economic Impact Payments (EIPs) aided in reducing financial distress for both owners and renters at the outset of the pandemic and prevented longer-run problems in mortgage and housing markets.
• Over 80 percent of borrowers who missed a mortgage payment in the first three months of the pandemic enrolled in forbearance. Although minority mortgage borrowers were much more likely to experience distress and miss mortgage payments, conditional on missing payments, forbearance uptake was similar across racial and ethnic lines.
• Low interest rates led to a wave of refinancing, but fewer Black borrowers benefited from refinancing than white borrowers.
• The share of renters behind on rental payments has been above 2017 levels since 2020. Renter households who missed a rental payment were more likely to be lower-income households and were disproportionately minority households. Missed payments were most common among households who were struggling prior to the pandemic. The erratic rollout of the ERA, which was administered at the local level, prevented timely or easy access to these funds.
• Eviction moratoria resulted in a redirection of scarce household resources to immediate consumption needs and likely prevented homelessness. The decline in evictions during the pandemic is not solely the result of the eviction moratorium. The decline may also reflect the impact of ERA, greater access to legal aid, the impact of eviction diversion programs, and income replacement for households.”

Read the full chapter here.

From VoxEU post by Leandro Prados de la Escosura:

“GDP per capita is a commonly used, but imperfect, proxy for human wellbeing. This column analyses the relationship between life expectancy at birth and per capita income over the past 150 years. It shows that life expectancy and per capita income growth behaved differently in terms of trends and distribution over the period. The relationship was particularly weak during the period 1914 to 1950. Separately, medical improvements and the diffusion of medical knowledge have been crucial drivers of life expectancy improvements across the world.

Human wellbeing is increasingly viewed as a multidimensional phenomenon, of which income is only one facet (Stiglitz et al. 2009, OECD 2011, Proto and Rustichini 2014). However, economists continue to rely on GDP to gauge wellbeing (Oulton 2012). A way to assess GDP as a comprehensive measure of wellbeing is by looking beyond per capita income. In a recent paper, I focus on life expectancy at birth – a synthetic measure of health – and its relationship with per capita income over the past 150 years (Prados de la Escosura 2022).

An important caveat is that, when assessing life expectancy over time and across countries, we need to bear in mind that original values of life expectancy are bounded and that life quality improves with the quantity of years lived (Prados de la Escosura 2021). A solution is provided by Kakwani’s (1993) non-linear transformation in which an increase in life expectancy at birth at a higher level implies a greater achievement than would have been the case had it occurred at a lower level.

Trends in life expectancy and per capita income

Life expectancy (expressed as a Kakwani index) exhibits slightly faster long-run growth than per capita GDP. A closer look, however, reveals an apparent development puzzle: economic growth and life expectancy gains do not match each other (Table 1). During the globalisation backlash between 1914 and 1950, real per capita GDP growth slowed down as world commodity and factor markets disintegrated, while life expectancy experienced major gains across the board. But, from 1950 onwards, life expectancy achieved, on average, smaller gains to GDP per head. Thus, world average life expectancy exhibited a major advance across the board before 1950, earlier than usually presumed and at odds with the view that that global health only improved after WWII, when new drugs from the West reached the rest of the world (Acemoglu and Johnson 2007, Klasing and Milionis 2020).”

Continue reading here.