The previous post was a reaction to a New York Times piece by Conor Dougherty, titled “What Kalamazoo (Yes, Kalamazoo) Reveals About the Nation’s Housing Crisis”.
Suppose we hadn’t first prohibited apartments, small lots, etc., and thus regulated the bottom of the market out of existence. Would we then be okay with today’s stricter liquidity requirements? Ie. If there were a lot more low cost (as in less lumber, drywall, etc) housing available, the ladder extended further down, then would the “should haves” have needed big mortgages at sub 740 credit scores, or could they have been well served by mortgages that were just smaller?
I think your analysis of the mortgage tightening as a demand and liquidity shock is very insightful and really reframes what has happened in the last 20 years. But at the same time, I suspect the damage done is somewhat predicated on the idea that a 2000 sqft house on a 5000 sqft lot is the minimum unit of housing that is broadly allowed to be created, and that our cities all sprawled out to their Marchetti limit by the late 90s / early 00s…
I agree. Kalamazoo may not be the best example. But the way I would describe the major metro areas is that they all have overregulated multi family so that there is a shortage of dense infill housing. Most cities were making up for that by building single family homes in the exurbs. The mortgage crackdown ended that. So it’s a combination of the two. At this point most cities probably would have more of both if they were deregulated.
As with you, my head simply spins when I read about the three anecdotes.
Is this because it is harder to get people with actual modest incomes to agree to be interviewed? Or the NYT reporter thought households with incomes above $100k were "average"? ( I see this in national media in DC and NY. They think someone working in the White House for $200k is middle class, and even maybe on the bottom end of it, really in straitened circumstances).
And then the reporter never pondered public rental assistance to a household, in Kalamazoo no less, that had more than $100k in income?
Suppose we hadn’t first prohibited apartments, small lots, etc., and thus regulated the bottom of the market out of existence. Would we then be okay with today’s stricter liquidity requirements? Ie. If there were a lot more low cost (as in less lumber, drywall, etc) housing available, the ladder extended further down, then would the “should haves” have needed big mortgages at sub 740 credit scores, or could they have been well served by mortgages that were just smaller?
I think your analysis of the mortgage tightening as a demand and liquidity shock is very insightful and really reframes what has happened in the last 20 years. But at the same time, I suspect the damage done is somewhat predicated on the idea that a 2000 sqft house on a 5000 sqft lot is the minimum unit of housing that is broadly allowed to be created, and that our cities all sprawled out to their Marchetti limit by the late 90s / early 00s…
How do these issues interrelate?
I agree. Kalamazoo may not be the best example. But the way I would describe the major metro areas is that they all have overregulated multi family so that there is a shortage of dense infill housing. Most cities were making up for that by building single family homes in the exurbs. The mortgage crackdown ended that. So it’s a combination of the two. At this point most cities probably would have more of both if they were deregulated.
As with you, my head simply spins when I read about the three anecdotes.
Is this because it is harder to get people with actual modest incomes to agree to be interviewed? Or the NYT reporter thought households with incomes above $100k were "average"? ( I see this in national media in DC and NY. They think someone working in the White House for $200k is middle class, and even maybe on the bottom end of it, really in straitened circumstances).
And then the reporter never pondered public rental assistance to a household, in Kalamazoo no less, that had more than $100k in income?
And this is one of our better newspapers?