The Unassuming Economist

From a paper by Yiran Zhao, Xiangyun Gao, Huiling Zheng, Yupeng Zhang, Qingru Sun, Anjian Wang, and HaiZhong An:

“This study examines the impact of international crude oil prices on national sub-price indices following external shocks. It analyzes the heterogeneous transmission mechanisms of these shocks across diverse national price index networks. To achieve this, we employ Granger causality tests as the filter to construct impulse response networks. This approach helps unveil the duration, magnitude, and pathways of impact on sub-price indices in five countries: China, the US, Russia, Germany, and the UK. Our findings suggest that the impact of crude oil price changes on national sub-price indices is most pronounced within 1-2 months, and more persistent on the Producer Price Index (PPI) than the Consumer Price Index (CPI). Identifying specific sub-price indices affected by shocks shows that China and the US are more significantly impacted. Moreover, identifying the transmission paths of crude oil price changes within a country’s internal price system underscores the significance of the CPI of transportation. This study of price transmission within countries offers key insights for managing economic shocks at the microeconomic level.”

From a paper by Paolo Di Lorenzo, and Eric Anthony Lacey:

“This paper provides an overview of issues related to fiscal consolidation drawing on the literature; it distills some lessons from fiscal consolidation episodes using a new database covering 196 countries from 2000 to 2023. The paper discusses the motives, timing, design, and political economy of fiscal consolidation, as well as its macroeconomic and social impacts. We find that fiscal consolidation is often necessary and successful in restoring fiscal sustainability by stopping debt accumulation, but less successful in lowering debt levels; moreover, it can also entail significant costs and trade-offs in terms of growth, poverty, and inequality. Composition also matters, as expenditure-based consolidations tend to be more successful than revenue-based consolidations and less likely to cause a deterioration in poverty rates or inequality. However, revenue gains usually play an important role starting in the second year of consolidation. Overall, the paper suggests that successful fiscal consolidation requires careful consideration of the economic context, the composition of adjustment, complementary economic policies, and communication and credibility of the strategy. The best way to implement fiscal adjustment is to establish a consolidation strategy in normal/non-crisis times} to ensure that governments do not have to rely on abrupt, pro-cyclical adjustments that may exhaust all buffers in the aftermath of a shock.”

From a paper by David M. Brickman:

“Over the past four decades, the multifamily housing market has grown and evolved significantly to become a much more prominent part of the US housing landscape. Since 1990, the total value of the multifamily housing stock has grown more than tenfold, from less than $600 million to more than $6
billion today, as both the number and value of multifamily housing units have steadily increased. Although a broad range of macroeconomic and demographic factors have contributed to this growth, the primary catalyst has been the establishment of well-functioning multifamily capital markets, defined by large liquid debt and equity markets and a largely unconstrained private rental market. Against this backdrop, multifamily housing has become a standout among commercial real estate in terms of capital flows and performance while disproportionately contributing to the nation’s supply of newly constructed housing at this moment of intense shortages and affordability challenges.

Given the success of the modern multifamily capital and housing markets, there is value in understanding their development to identify market areas in need of additional investment and to inform regional and global markets elsewhere. To that end, this brief identifies and examines key moments in the evolution of multifamily debt and equity flows from the late 1980s through today and their impact on capitalization rates, property values, housing supply, rental rates, and rent growth. The brief concludes with a discussion of policy implications.”

Continue reading here.

On cross-country:

• Housing in Europe – 2024 edition – Eurostat
• Global Housing and Mortgage Outlook 2025 – Fitch Ratings

Working papers and conferences:

• Monetary policy and housing markets: insights using a novel measure of housing supply elasticity – BIS
• Assessing expectations of European house prices – ESRI
• Assessing Assessors – NBER
• The Forces Keeping Home Prices High. Cameron Murray on housing market equilibria – Home Economics

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

• Realtor.com 2025 Housing Forecast – Realtor.com
• Where home prices are expected to go in 2025, predicted by real estate data giant. Given the recent jump in inventory, CoreLogic now has lower expectations for national home price growth in 2025. – Fast Company
• How 2024’s Housing Market Sets the Stage for 2025 – CoreLogic
• House Price Appreciation by State and Metro Area: Third Quarter 2024 – NAHB
• Housing Markets Facing Greater Risk of Decline Concentrated in California, New Jersey, Illinois, and Florida – ATTOM
• Top 10 Most Vulnerable U.S. Housing Markets in Q3 2024 – ATTOM
• Asking Rents Mostly Unchanged Year-over-year – Calculated Risk
• Home Price Expectations Survey – Fannie Mae
• Expert Panel Upwardly Revises Home Price Growth Outlook, Still Expects Deceleration in 2025 and 2026. Panel Also Forecasts Stagnant Home Sales and Only Modestly Lower Mortgage Rates – Fannie Mae
• 1st Look at Local Housing Markets in November. Another Year-over-year Sales Gain in November – Calculated Risk
• Mortgage Rates Rise in November Amid Post-Election Market Volatility – NAHB
• Wall Street Is Betting Billions on Rental Homes as Ownership Slips Out of Reach. Build-to-rent homes offer upscale amenities and desirable locations – Wall Street Journal
• Part 1: Current State of the Housing Market; Overview for mid-December 2024 – Calculated Risk
• What Determines the Rate on a 30-Year Mortgage? – Fannie Mae

On the US—other developments:    

• A ‘Silver Tsunami’ Won’t Solve Housing Affordability Challenges – Zillow
• Trump Policies 2.0: What Can State, Local Governments Expect? – CoreLogic
• December CPI Blog: Updating our Housing Model – The White House
• November’s Housing Market Crawled to Its Slowest Pace in 5 Years—Even as Prices Fell and Housing Stock Jumped – Realtor.com
• New York City Approves a Plan to Create 80,000 New Homes. The City Council passed a major housing plan known as “City of Yes.” Experts and elected officials say it is only a first step to address the housing crisis. – New York Times  
• The Insurance Crisis Continues to Weigh on Homeowners – Harvard Joint Center for Housing Studies
• How Bob Dylan, Housing Prices, and Harvard show that Networks Matter. Dylan’s journey from unknown to icon illuminates a broader truth about success: networks matter, and access to them is becoming increasingly restricted. – The Studies Show
• Consumer Housing Sentiment Up Significantly Year over Year. Jump in Confidence Driven Largely by Increased Optimism that Mortgage Rates Will Fall – Fannie Mae
• Questioning the Housing Crisis: Introduction to a Series – Cato Institute
• Housing Availability and Affordability: Evidence That the United States Is Not in a Crisis. During the past few years many groups have suggested that the United States is experiencing a housing crisis, one marked by a supply deficit and affordability problems. – Cato Institute
• How big is the U.S. housing shortage? – NPR
• Mortgage Regulators Are Shrugging Off Climate Risk. It Could Cost Taxpayers Billions. Fannie Mae and Freddie Mac, which backstop most U.S. mortgages, know floods and fires are a growing problem. But little action has been taken. – New York Times
• Foreclosure Filings Ease Nationwide in November 2024 Amid Seasonal Influences – ATTOM
• Why Housing Is a Frontline Defense Against Climate Change – Time
• Inflation Remains Sticky Despite Easing Housing Costs – NAHB
• Can the U.S. Climb Out of Its ‘Unprecedented’ Housing Crisis? The 2024 housing market was the slowest in decades. Next year’s might not be much better. It may come down to how many new homes can be built. – New York Times 
• Wall Street Is Betting Billions on Rental Homes as Ownership Slips Out of Reach. Build-to-rent homes offer upscale amenities and desirable locations – Wall Street Journal
• The Housing Industry Never Recovered From the Great Recession. A decade of depression in construction led to a concentrated, sclerotic industry. – The American Prospect

On Australia and New Zealand:

• [Australia] How the housing crisis is reshaping Australia – The Guardian
• [Australia] Forced to move by the Australian housing crisis: three-hour commutes and ‘never mind seeing your family’ – The Guardian
• [New Zealand] An American-Style Housing Crisis in New Zealand. What the United States can learn from the Pacific nation – The Atlantic

On other countries:  

• [Canada] Why were these mortgage borrowers left out of the latest stress-test change? – The Globe and Mail
• [Ireland] Irish House Prices Are Overvalued by Up to 10%, Says ESRI. Housing supply constraints has led to an increase in prices. Report says property market at risk of a ‘painful correction’ – Bloomberg
• [Ireland] ESRI again highlights regulator’s role in fanning house prices. Think-tank not backing off previous suggestion that loosening mortgage rules boosted the property market – The Irish Times
• [Italy] Renters in Rome struggle as coming Holy Year dries up housing market – Reuters
• [Korea] The Bank of Korea Moves Beyond Monetary Policy. Earlier this year, South Korea’s central bank worked with government ministries to devise macroprudential measures to stabilize the country’s housing market. This shows that monetary policymakers can, and perhaps should, play a critical role in tackling structural challenges that could profoundly affect future prosperity. – Project Syndicate
• [Portugal] Portugal’s Residential Property Market Analysis 2024 – Global Property Guide
• [South Africa] South Africa’s Residential Property Market Analysis 2024 – Global Property Guide
• [Spain] El precio de la vivienda no cede y sube otro 8,1% en el tercer trimestre, su mayor repunte en dos años y medio. Los pisos a estrenar se encarecen casi un 10% en un año, según el Instituto Nacional de Estadística. Los desahucios sobre residencia habitual caen más de un 20% respecto al segundo trimester – El Pais
• [Switzerland] Switzerland Residential Property Market Analysis 2024 – Global Property Guide
• [United Kingdom] Prioritise people’s needs ‘over newts’ in housing policy, says Angela Rayner. Housing secretary says wildlife should be protected but not at the expense of building the homes the country needs – The Guardian
• [United Kingdom] UK House Prices Jump Most in Over Two Years, Halifax Says. Average prices rise 1.3% in November to hit new record high. Strong labor market and BOE interest-rate cut support market – Bloomberg
• [United Kingdom] England house prices ‘affordable’ only for richest 10% in 2022-23. Office for National Statistics data highlights property market pressures – FT 

From a paper by Munseob Lee, Claudia Macaluso, and Felipe Schwartzman:

“Our paper addresses the heterogeneous effects of monetary policy on households of different races. The cyclical volatility of real income differs significantly for households of different races and income levels, reflecting differential exposure to fluctuations in employment and consumer prices. All Black households are disproportionately affected by employment fluctuations, whereas price volatility is only particularly pronounced for Black households with income above the national median. The latter face 40 percent higher price volatility than both poorer households of the same race and white households of similar income. To evaluate the effects of policy, we propose a New Keynesian framework with heterogeneous exposure to employment and price volatility. We find that an accommodative monetary stance generates asymmetric outcomes within race groups. Low-income households experience unemployment stabilization benefits, while high income ones incur real income volatility costs. Differences are especially large among Black households. Reducing the volatility of unemployment by 1 percentage point engenders a 1.17 percentage point reduction in overall income volatility for poorer Black households, but an increase of 0.6 percentage points in income volatility for richer Black households.”