A bit tangential to this topic perhaps, but I just got back from a nice visit to the Rapid City area of South Dakota. Like any good housing nerd I took a quick look at local real estate listings and was impressed by the diversity and relative affordability. I found a tiny, one bedroom bungalow for 150k at the low end and a $600k 3 bedroom by a river. Most notably, new construction 3 bedrooms were priced in the $285-$325k range, which I consider to be very affordable.
In other news, Texas passed a very pro-housing piece of legislation that pretty much guarantees that they will be a growth state for the next decade. Meanwhile in Boston some people are complaining about proposed height regulations for new high rises----"We don't want to be like Manhattan!" cry the pearl clutchers. The Blue States are doomed.
Yeah. Texans for Reasonable Solutions seems to really be doing smart work in Texas.
Interesting find on Rapid City! They appear to be a rare winner! In most of the country's interior, keep in mind that the problem has been the mortgage crackdown. That makes prices affordable and rents higher. It shut down single family construction, and most cities don't support apartment construction. But, Rapid City is on a tear!
Permits
2005: 942 single family 234 multi-family
Most Midwestern cities of that size in 2024 would have permitted about 400 SF and 250 MF
Rapid City:
2024: 786 SF and 767! They are building more than in 2005, and it's because they are legally allowing apartments to get built. And this has been happening for several years!
Any time I see time series analysis I'm suspicious of the choice of starting date and/or indexing period, and this is certainly one of those times. I'd like to see how the result varies for different choices of indexing period. Your chart shows something like a 10% increase in mortgages outstanding from 2000Q2 to 2003Q2. I think history should start, for this conversation, in 1993, not 2003. The decade 1993-2003 featured the rise of AUS, the use of FICO credit scores, and the development of a subprime mortgage lending market that hadn't existed before. I maintain that the credit box is still much wider than it was in 1993, and in most respects is wider than it was in 2003. So, some of your missing mortgages are the narrowing of the credit box, and some of those missing mortgages are unleveraged home ownership, and a lot of those missing mortgages are people who might qualify if they could afford a house where they live. (Bearing in mind that last one involves both the credit box and home prices relative to income.) If you want to be persuasive about your argument, I think you need to get into the mechanics of how mortgage credit is made available or unavailable and what, exactly, mortgage lenders, private mortgage insurers, mortgage investors, GSEs, and FHA/VA/RHA/GNMA did to effectuate a "mortgage crackdown".
I took these data sets back as far as they go. In other posts, I use data that goes back further. In the previous 3-4 decades, there weren't deviations anywhere close to as large as these.
The Urban Institute has a nice report outlining a lot of the specifics. I don't think any of the major mortgage trackers shows lending standards today looser than they were in the 1990s.
A bit tangential to this topic perhaps, but I just got back from a nice visit to the Rapid City area of South Dakota. Like any good housing nerd I took a quick look at local real estate listings and was impressed by the diversity and relative affordability. I found a tiny, one bedroom bungalow for 150k at the low end and a $600k 3 bedroom by a river. Most notably, new construction 3 bedrooms were priced in the $285-$325k range, which I consider to be very affordable.
In other news, Texas passed a very pro-housing piece of legislation that pretty much guarantees that they will be a growth state for the next decade. Meanwhile in Boston some people are complaining about proposed height regulations for new high rises----"We don't want to be like Manhattan!" cry the pearl clutchers. The Blue States are doomed.
Yeah. Texans for Reasonable Solutions seems to really be doing smart work in Texas.
Interesting find on Rapid City! They appear to be a rare winner! In most of the country's interior, keep in mind that the problem has been the mortgage crackdown. That makes prices affordable and rents higher. It shut down single family construction, and most cities don't support apartment construction. But, Rapid City is on a tear!
Permits
2005: 942 single family 234 multi-family
Most Midwestern cities of that size in 2024 would have permitted about 400 SF and 250 MF
Rapid City:
2024: 786 SF and 767! They are building more than in 2005, and it's because they are legally allowing apartments to get built. And this has been happening for several years!
Actually US de facto housing policy makes sense.
First, decrease supply (criminalize housing production).
To balance that, decrease demand (criminalize mortgages).
Hu sez we ain't a grate nation?
Any time I see time series analysis I'm suspicious of the choice of starting date and/or indexing period, and this is certainly one of those times. I'd like to see how the result varies for different choices of indexing period. Your chart shows something like a 10% increase in mortgages outstanding from 2000Q2 to 2003Q2. I think history should start, for this conversation, in 1993, not 2003. The decade 1993-2003 featured the rise of AUS, the use of FICO credit scores, and the development of a subprime mortgage lending market that hadn't existed before. I maintain that the credit box is still much wider than it was in 1993, and in most respects is wider than it was in 2003. So, some of your missing mortgages are the narrowing of the credit box, and some of those missing mortgages are unleveraged home ownership, and a lot of those missing mortgages are people who might qualify if they could afford a house where they live. (Bearing in mind that last one involves both the credit box and home prices relative to income.) If you want to be persuasive about your argument, I think you need to get into the mechanics of how mortgage credit is made available or unavailable and what, exactly, mortgage lenders, private mortgage insurers, mortgage investors, GSEs, and FHA/VA/RHA/GNMA did to effectuate a "mortgage crackdown".
I took these data sets back as far as they go. In other posts, I use data that goes back further. In the previous 3-4 decades, there weren't deviations anywhere close to as large as these.
The Urban Institute has a nice report outlining a lot of the specifics. I don't think any of the major mortgage trackers shows lending standards today looser than they were in the 1990s.
https://www.urban.org/sites/default/files/publication/88826/quantifying_tightness_of_credit.pdf