Lance Lambert reported on a couple of different pieces of housing analytics that make for an interesting pairing, when you put on the EHT-colored glasses and consider all the implications of what they are saying. First, he reported on Bank of America analysis:
As I've been reading this series my initial thought has been "what a bunch of idiots...." but, mea culpa, I was one of those idiots for the better part of the past two decades. From 2008 and through the recession I fixated on the Case-Schiller graph, read Dean Baker, and bought into a narrative of a "housing bubble." I conflated the price gains in the metro Boston area with some set of immoveable forces and never made the connection to the supply constraints that had been building up the pressure for so many years. Granted, there were some price corrections during the Great Recession (which I benefitted from personally) but the trends driven by the chronic shortage reasserted by 2012. Now, like many people in this region I'm both "house rich" and "house poor"---a paradox consistent with a broken filtering process.
I think Kevin is unique in describing the constraints on mortgage lending as a major part of the current problem. It policies were rationalized, however, we would be unleashing new buyers into supply constrained markets in many metro regions. The best case scenario is more migration from super closed-access cities to lower tier urban areas that could rebalance some of the settlement inequalities. The worst case scenario is price run-ups for low quality dwellings that aren't sustainable for the new purchasing cohorts followed by a higher rates of default and foreclosure.
1) Thanks, as always, for the kind review and feedback.
2) I'm not sure illiquidity ever makes things better. In fact, I think it might fall under the category of "make ourselves poor enough to match our poor housing". Closed access makes good things seem like bad things, so you should be careful about trying to fix Closed Access by getting rid of good things.
3) I was a bubble skeptic as late as 2014, and I explained high prices with low interest rates, which is ironic, since after digging deeply into the topic, I'm still a bubble skeptic, but have mostly concluded that interest rates are not important. I'm not sure if that reflects well or poorly on my analytical development.
As I've been reading this series my initial thought has been "what a bunch of idiots...." but, mea culpa, I was one of those idiots for the better part of the past two decades. From 2008 and through the recession I fixated on the Case-Schiller graph, read Dean Baker, and bought into a narrative of a "housing bubble." I conflated the price gains in the metro Boston area with some set of immoveable forces and never made the connection to the supply constraints that had been building up the pressure for so many years. Granted, there were some price corrections during the Great Recession (which I benefitted from personally) but the trends driven by the chronic shortage reasserted by 2012. Now, like many people in this region I'm both "house rich" and "house poor"---a paradox consistent with a broken filtering process.
I think Kevin is unique in describing the constraints on mortgage lending as a major part of the current problem. It policies were rationalized, however, we would be unleashing new buyers into supply constrained markets in many metro regions. The best case scenario is more migration from super closed-access cities to lower tier urban areas that could rebalance some of the settlement inequalities. The worst case scenario is price run-ups for low quality dwellings that aren't sustainable for the new purchasing cohorts followed by a higher rates of default and foreclosure.
1) Thanks, as always, for the kind review and feedback.
2) I'm not sure illiquidity ever makes things better. In fact, I think it might fall under the category of "make ourselves poor enough to match our poor housing". Closed access makes good things seem like bad things, so you should be careful about trying to fix Closed Access by getting rid of good things.
3) I was a bubble skeptic as late as 2014, and I explained high prices with low interest rates, which is ironic, since after digging deeply into the topic, I'm still a bubble skeptic, but have mostly concluded that interest rates are not important. I'm not sure if that reflects well or poorly on my analytical development.