I recently wrote about updated IRS income estimates. One thing the 2022 income updates allow me to do is extend my estimate of income growth before and after rent.
How I like to summarize it: If we regulated auto manufacturing the way we regulate new home construction, GM would only make Cadillacs, you couldn’t buy a Chevy.
What is especially frustrating is that “conservatives”, who still look for commies hiding under the bed (unless it’s Putin, then it’s “Hi Vladdy, what’s up?”), advocate the socialist practice of land use restrictions. You’d think they’d want to “own the libs” by showing how capitalism unleashed can produce abundant affordable housing.
You are of course correct, but the explanation is even simpler than you state.
Inflation benefits those who own real assets, harms those who don’t.
Homes are real assets.
So you have confirmed that the economists are correct on average that the 65% of the country who own their own homes are better off given/despite the Biden/Yellen/Powell inflation.
And of course continue to benefit - or at least harmed less - by the NIMBY policies in most of the U.S.
About the only non-obvious stat you cite is that rents proportionally for the lowest income went up more than for those at the upper end of the rental market.
Not every country has a central bank with this kind of power. I was speaking from a purely macroeconomics perspective, irrespective of individual countries.
Only if the Fed increases interest rates to stop inflation. Pure inflation without Fed intervention wouldn’t necessarily be so, though banks could increase their delta from the Fed rate.
"But, I think I’d give up my smart phone if the deal was to choose between a home and a phone."
I would too, but my cousin knows a guy with $200k in the bank who lives on the streets. Not everyone has the same preferences.
A big factor that you haven't accounted for in your scatter charts is the stimulus payments. Since they weren't taxed, they don't show up as adjusted income. Obviously they have the most effect at the bottom and probably completely offset the losses you show. It probably isn't shocking to see that when you flood the market with cash, prices rise. I've recently see rents come down in some apartments from where they were a year or two ago. Not in a lot of places, but more than zero.
Your suggestion to "just build more" works at the margins. If you build one house, then someone moves into it an opens up some other unit for another person. But does it scale? I don't think it does. In my town they build maybe 10 houses a year. There's plenty of land and no one opposes new construction. There are subdivisions scratched in that could take 100 houses. But if you built them all this year there wouldn't be 100 people who could pay 1/2 a million to buy them.
The reason houses in my small town cost 1/2 a million (a lot of money in rural South Carolina) is because it's really expensive to build them. I recently wrote a post about multifamily construction costs. Without lowering hard construction costs (materials plus labor) we can't build our way out of this problem.
1) I don't think the homelessness problem is due to preferences. There is a distribution of people with different problems and preferences, and homelessness is reaching further up into that distribution because there is a housing shortage.
2) Most of the excess rent inflation shown in Figure 1 pre-dates Covid.
3) I estimate the shortage at about 10% of the housing stock, so reversing the damage might be associated with a town that has been building 10 houses a year maybe building 20 houses a year for the next decade or so.
4) Costs have increased, and eventually they would be a binding factor, but where homes are expensive today, it is because the land is expensive.
1) A large portion of homeless people are addicts. Whether you describe that as a preference or not, caseworkers report that they frequently reject assistance because they want to be on the streets, where their friends and the drugs are. There is no doubt that the explosion of opioids and meth have increased homelessness.
2) The stimulus payments are still completely within the range of the chart. There was dramatic post-stimulus rent inflation in the markets I've studied.
3) The reason they only build 10 houses a year is because that's what the market will support. There aren't buyers for 20 a year. That's only this town though.
4) You might want to look at my post from yesterday. My analysis is exclusive of land cost. Looking only at the hard construction costs (again: materials plus labor) construction is really expensive.
It’s tough getting over your 1st argument because it’s so obviously messed up to claim homelessness is a lifestyle preference.
The rest of your arguments seem to actually support KE’s hypothesis of mortgage constraints suppressing market demand for housing especially in low price class homes (markets can support fewer homes because demand remains intentionally suppressed), and the stimulus check argument propping up rents just means some of your anecdotal homeless lifestylers may actually not have been homeless because they were having fun with their bum friends, but instead were homeless because they couldn’t get a mortage and couldn’t afford to rent until covid ’made it rain’. Those stimulus checks kept families off the streets. Thank God for that
There is probably some lingering supply-chain issues caused by Covid, and maybe some supply-chain atrophy related to post-financial crisis destruction of homebuilding capacity remains. But it’s not the determining constraint in today’s America where in many places only mid-to-high end homes (detached mcmansions) are legal to be built due to NIMBYs obstructing multi-family housing, duplexes and triplexes - precisely because the incumbents don’t want low-income-homeowners/aspirational homeless near them
I agree with all except #3. Maybe it’s true in your area, idk. But zoning restrictions/regulations are hugely responsible for the lack of home building in the areas people want to live.
I'd say you can roughly divide the country into thirds:
1) NYC, LA, Boston, and San Francisco. Zoning is binding enough to cause high and regressive rents, and was already doing that before 2008.
2) Growing large cities. They were generally growing into greenfield space before 2008, in spite of zoning limits. When the mortgage crackdown cut off entry level new housing construction, the economics would have worked for replacing it with multi-family infill, but it was legally blocked, so urban land values have become elevated.
3) Rural areas and non-growing cities. The mortgage crackdown pushed home values below construction costs, even where land is relatively cheap, so rents have to rise enough to trigger new building again. Even if multi-family infill was legal, it may not have penciled.
1) That is true, but homelessness across regions is correlated with rents, not drug addiction.
2) Regressive rent inflation dates at least to 2015 and has moderated since 2020.
3) The market will only support that many homes because of the mortgage crackdown, though there is now a burgeoning build-to-rent market because the rent inflation has now bridged the valuation gap and landlords are increasingly funding new units.
4) I don't deny that costs are high. I deny that they are the binding constraint. If they were, land values would be lower instead of higher. Costs are definitely elevated too.
I read your post, and one comment I would make about it is that under normal supply conditions, the older stock of homes becomes the affordable housing, so I don't find it very informative if new construction doesn't pencil for low-tier units. When more high-tier units are constructed, the 40 or 80 year old units make up the vast portion of affordable units. And wherever supply conditions have been normal, those units sell for much less than replacement value.
The main motivator for my model here is that the combination of zoning and mortgage restrictions have mostly increased the price of land under old homes that at any time before the recent couple of decades sold at discounts to new units.
In 2002, in Phoenix, builders were very active, and homes sold for about 3x incomes across the valley. Today, with much less building, they still sell for about 3x at the high end, but now they sell for 6-8x at the low end. That's because the land under old neighborhoods has become inflated as a side effect of obstructed new construction.
Yes, older stock becomes affordable, but only to the extent that there is a market for the new homes. If developers build a million new homes but no one buys them, then no older units become affordable. The cost of construction constrains the amount of new housing the market can absorb.
What are these mortgage restrictions? I asked grok and it didn't come up with anything. I asked Gemini and it offered a number of changes to regulation and pointed out that with higher interest rates many consumers feel locked into their existing mortgage.
On CFPB's website they have a graph of mortgage originations. It shows a massive spike in 2021 so it makes sense they'd be lower now. (Especially since interest rates have more than doubled.)Their data is only until last August. The map is interesting with California being up 19% year over year and Texas being down 1%.
Hi Kevin, I’m 34, trained as an IT project manager and bookkeeper. If I wanted to change careers and get involved in increasing housing supply, what would you suggest I do? I’d be willing to retrain. I currently live in northern New Mexico, but have family in the Bay Area. Really appreciate the rigor and passion you bring to your work and the clarity of your prose.
It's a very decentralized industry. I would guess that there are a number of private firms in Albuquerque or Santa Fe that run funds that invest in new or existing apartments that have various roles to fill from analysis to sales to project or property management. And, there are probably a lot of little firms doing small infill projects of townhomes or small multi-unit projects.
Maybe the New Mexico Urban Land Institute would be a good place to try to do some networking?
OT but in the ballpark, the average cost of house in Canada today is $700k. I won't even mention Vancouver.
A generation or two ago a middle-class guy could thrive in Canada, buy a house, enjoy reasonably good government. To be sure, Toronto and Montreal are probably, in many regards, more glamorous or cosmopolitan than ever before ( have not visited in decades).
Can we really say Canada is a success? For who? Living standards are higher than ever?
Would you rather live in dull Canada and make payments on a $200k house, or "cosmopolitan" Canada and make payments on a $700k house?
I use Canada as it seems to neutralize US-based political biases or dogmas.
I will say it again: America's macroeconomists should write 100 op-eds on ways to cut housing costs, for every one op-ed on tariffs or inflation. Not vice versa.
America's macroeconomists are barking up the wrong tree...in the wrong forest.
Canada's macroeconomists should be marching in the street, maybe with pitchforks, about high housing costs.
2. Tariffs directly increase housing costs (lumber being a prime example), and protectionism's close cousin, nativism, deprives the construction industry of its workforce.
3. You will find very few economists, or people who read economists' oped, that agree with current housing policies. So writing YIMBY op-eds has a feeling to "preaching to the choir". Yes, this does not excuse a certain apathy and defeatism, but partly explains it. Ultimately the culprit here is like 60% of the general public, voting not as much out of persuasion but out of self interest, not some sect of intellectuals with bad ideas they might be disabused from.
I have mixed sentiments on tariffs, for a lot of reasons.
Sadly, current events (Russia) show that Western liberal democracies must be able to sustain a long conventional war---the endless demand for old-fashioned material and also the evolving tech arms.
This is not a theory, this is happening right before our eyes in Ukraine.
(One might also ask why Western liberal democracies are, through trade, funneling trillions of dollars into the most illiberal militaries on earth---China, Russia, and Iran. Did trade make Russia less truculent..or did oil money fund Russian aggression and confidence? You tell me).
On other aspects, I am a fan of Michael Pettis, and his book, "Trade Wars are Class Wars." Even Kevin Erdmann should read this book. :)
I am for legal immigration, but not illegal immigration. There is an element of "labor-busting" in bringing into the US large numbers of desperate workers. I grew up in a family that worked, not invested for a living. I worked for a living most of my life (I started a small furniture-making factory, and lasted about 10 years, and during that period I was an employer). My affinity does not make me a nativist.
For whatever reason, orthodox macroeconomists go bananas on the topics of tariffs and inflation. Housing? Not so much.
But housing is many times a more-important topic than tariffs.
"funneling trillions of dollars into the most illiberal militaries on earth---China, Russia, and Iran."
Here you are implying we are sending them money gratis et amore dei, not that we are paying for goods we clearly find better than any alternative. Ie, the Trumpian rhetoric of us "subsidizing" the countries selling stuff to Americans. I can see why someone infamous for never paying his bills would think of consensual transactions in these terms, but why do you?
"Did trade make Russia less truculent..or did oil money fund Russian aggression and confidence? You tell me"
What exactly was the alternative (other than just reduce our consumptions of fossil fuels in general)? Oil is a global commodity with very inelastic demand. Had we refused to buy Russian oil, then they would have just sold it elsewhere. It's rather different for pretty much *any manufactured good*, which is what Trump seems most worried about
"Sadly, current events (Russia) show that Western liberal democracies must be able to sustain a long conventional war---the endless demand for old-fashioned material and also the evolving tech arms. "
Yeah, tariffs don't achieve that. Much like the Jones act did not actually make American shipbuilding more robust, it just made shipping more expensive and the entire economy less productive. Do you understand this is not a theoretical discussion? We have centuries of data. Just stating your policy aim does not magically make your policy any more conductive to that aim.
"There is an element of "labor-busting" in bringing into the US large numbers of desperate worker"
No, there is not. Again, not a theoretical discussion. Except for Borjas and his bad statistical shenanigans, literally every empirical analysis found immigration increases native wages across the whole distribution. Turns out that, quite intuitively, even desperate workers take the highest paying job if they can.
" grew up in a family that worked, not invested for a living. I worked for a living most of my life"
Then I guess you and your family were "desperate" (in the sense, you could not afford to not work). And yet, I suppose you still made normal American wages. Ever wondered why that was?
"But housing is many times a more-important topic than tariffs. "
And you should care a lot more about cancer than silver poisoning. Unless for some reason you or your guardian entrusted your health to a Taoist doctor who insists you ingest silver as a panacea. Then silver poisoning becomes quite a major concern, and you should be pretty resolute in refusing it.
"For whatever reason, orthodox macroeconomists go bananas on the topics of tariffs and inflation. Housing? Not so much. "
Because well, it's *macro*. We are talking about policies affecting, by definition, the entire economy. I agree that all the main American cities choosing the same insane housing policies is not that different from an insane federal policy. But there is a traditional focus on federal for obvious reasons. But yes, I agree with you that the profession, with some notable exceptions like Krugman and Glaeser, showed an unjustifiable incuriosity toward local and state policies. The empirical revolution changed that but macro is the one least touched by it, for various reasons.
This was a damn great article. Should put this in NYT front page. It really says it all
How I like to summarize it: If we regulated auto manufacturing the way we regulate new home construction, GM would only make Cadillacs, you couldn’t buy a Chevy.
What is especially frustrating is that “conservatives”, who still look for commies hiding under the bed (unless it’s Putin, then it’s “Hi Vladdy, what’s up?”), advocate the socialist practice of land use restrictions. You’d think they’d want to “own the libs” by showing how capitalism unleashed can produce abundant affordable housing.
You are of course correct, but the explanation is even simpler than you state.
Inflation benefits those who own real assets, harms those who don’t.
Homes are real assets.
So you have confirmed that the economists are correct on average that the 65% of the country who own their own homes are better off given/despite the Biden/Yellen/Powell inflation.
And of course continue to benefit - or at least harmed less - by the NIMBY policies in most of the U.S.
About the only non-obvious stat you cite is that rents proportionally for the lowest income went up more than for those at the upper end of the rental market.
Inflation also benefits those with debt.
Fixed rate debt, yes. Great point.
Variable rate, not so much.
Not every country has a central bank with this kind of power. I was speaking from a purely macroeconomics perspective, irrespective of individual countries.
I claim no particular global knowledge.
I was speaking from an almost purely U.S. perspective, irrespective of any real world differences in macroeconomic views. 😏
Only if the Fed increases interest rates to stop inflation. Pure inflation without Fed intervention wouldn’t necessarily be so, though banks could increase their delta from the Fed rate.
Ok… but when has the Fed NOT raised rates to stop inflation?
So you’re saying only… practically always! 😏
"But, I think I’d give up my smart phone if the deal was to choose between a home and a phone."
I would too, but my cousin knows a guy with $200k in the bank who lives on the streets. Not everyone has the same preferences.
A big factor that you haven't accounted for in your scatter charts is the stimulus payments. Since they weren't taxed, they don't show up as adjusted income. Obviously they have the most effect at the bottom and probably completely offset the losses you show. It probably isn't shocking to see that when you flood the market with cash, prices rise. I've recently see rents come down in some apartments from where they were a year or two ago. Not in a lot of places, but more than zero.
Your suggestion to "just build more" works at the margins. If you build one house, then someone moves into it an opens up some other unit for another person. But does it scale? I don't think it does. In my town they build maybe 10 houses a year. There's plenty of land and no one opposes new construction. There are subdivisions scratched in that could take 100 houses. But if you built them all this year there wouldn't be 100 people who could pay 1/2 a million to buy them.
The reason houses in my small town cost 1/2 a million (a lot of money in rural South Carolina) is because it's really expensive to build them. I recently wrote a post about multifamily construction costs. Without lowering hard construction costs (materials plus labor) we can't build our way out of this problem.
1) I don't think the homelessness problem is due to preferences. There is a distribution of people with different problems and preferences, and homelessness is reaching further up into that distribution because there is a housing shortage.
2) Most of the excess rent inflation shown in Figure 1 pre-dates Covid.
3) I estimate the shortage at about 10% of the housing stock, so reversing the damage might be associated with a town that has been building 10 houses a year maybe building 20 houses a year for the next decade or so.
4) Costs have increased, and eventually they would be a binding factor, but where homes are expensive today, it is because the land is expensive.
1) A large portion of homeless people are addicts. Whether you describe that as a preference or not, caseworkers report that they frequently reject assistance because they want to be on the streets, where their friends and the drugs are. There is no doubt that the explosion of opioids and meth have increased homelessness.
2) The stimulus payments are still completely within the range of the chart. There was dramatic post-stimulus rent inflation in the markets I've studied.
3) The reason they only build 10 houses a year is because that's what the market will support. There aren't buyers for 20 a year. That's only this town though.
4) You might want to look at my post from yesterday. My analysis is exclusive of land cost. Looking only at the hard construction costs (again: materials plus labor) construction is really expensive.
It’s tough getting over your 1st argument because it’s so obviously messed up to claim homelessness is a lifestyle preference.
The rest of your arguments seem to actually support KE’s hypothesis of mortgage constraints suppressing market demand for housing especially in low price class homes (markets can support fewer homes because demand remains intentionally suppressed), and the stimulus check argument propping up rents just means some of your anecdotal homeless lifestylers may actually not have been homeless because they were having fun with their bum friends, but instead were homeless because they couldn’t get a mortage and couldn’t afford to rent until covid ’made it rain’. Those stimulus checks kept families off the streets. Thank God for that
There is probably some lingering supply-chain issues caused by Covid, and maybe some supply-chain atrophy related to post-financial crisis destruction of homebuilding capacity remains. But it’s not the determining constraint in today’s America where in many places only mid-to-high end homes (detached mcmansions) are legal to be built due to NIMBYs obstructing multi-family housing, duplexes and triplexes - precisely because the incumbents don’t want low-income-homeowners/aspirational homeless near them
I agree with all except #3. Maybe it’s true in your area, idk. But zoning restrictions/regulations are hugely responsible for the lack of home building in the areas people want to live.
I'd say you can roughly divide the country into thirds:
1) NYC, LA, Boston, and San Francisco. Zoning is binding enough to cause high and regressive rents, and was already doing that before 2008.
2) Growing large cities. They were generally growing into greenfield space before 2008, in spite of zoning limits. When the mortgage crackdown cut off entry level new housing construction, the economics would have worked for replacing it with multi-family infill, but it was legally blocked, so urban land values have become elevated.
3) Rural areas and non-growing cities. The mortgage crackdown pushed home values below construction costs, even where land is relatively cheap, so rents have to rise enough to trigger new building again. Even if multi-family infill was legal, it may not have penciled.
Fair enough. Thanks!
1) That is true, but homelessness across regions is correlated with rents, not drug addiction.
2) Regressive rent inflation dates at least to 2015 and has moderated since 2020.
3) The market will only support that many homes because of the mortgage crackdown, though there is now a burgeoning build-to-rent market because the rent inflation has now bridged the valuation gap and landlords are increasingly funding new units.
4) I don't deny that costs are high. I deny that they are the binding constraint. If they were, land values would be lower instead of higher. Costs are definitely elevated too.
1 might be correct, but not obvious which is cause, which is effect.
Isn’t it correlated more with blue vs red policies? Incentives matter.
I read your post, and one comment I would make about it is that under normal supply conditions, the older stock of homes becomes the affordable housing, so I don't find it very informative if new construction doesn't pencil for low-tier units. When more high-tier units are constructed, the 40 or 80 year old units make up the vast portion of affordable units. And wherever supply conditions have been normal, those units sell for much less than replacement value.
The main motivator for my model here is that the combination of zoning and mortgage restrictions have mostly increased the price of land under old homes that at any time before the recent couple of decades sold at discounts to new units.
In 2002, in Phoenix, builders were very active, and homes sold for about 3x incomes across the valley. Today, with much less building, they still sell for about 3x at the high end, but now they sell for 6-8x at the low end. That's because the land under old neighborhoods has become inflated as a side effect of obstructed new construction.
Yes, older stock becomes affordable, but only to the extent that there is a market for the new homes. If developers build a million new homes but no one buys them, then no older units become affordable. The cost of construction constrains the amount of new housing the market can absorb.
What are these mortgage restrictions? I asked grok and it didn't come up with anything. I asked Gemini and it offered a number of changes to regulation and pointed out that with higher interest rates many consumers feel locked into their existing mortgage.
On CFPB's website they have a graph of mortgage originations. It shows a massive spike in 2021 so it makes sense they'd be lower now. (Especially since interest rates have more than doubled.)Their data is only until last August. The map is interesting with California being up 19% year over year and Texas being down 1%.
https://www.consumerfinance.gov/data-research/consumer-credit-trends/mortgages/origination-activity/
https://kevinerdmann.substack.com/p/mortgages-outstanding-by-credit-score
Hi Kevin, I’m 34, trained as an IT project manager and bookkeeper. If I wanted to change careers and get involved in increasing housing supply, what would you suggest I do? I’d be willing to retrain. I currently live in northern New Mexico, but have family in the Bay Area. Really appreciate the rigor and passion you bring to your work and the clarity of your prose.
It's a very decentralized industry. I would guess that there are a number of private firms in Albuquerque or Santa Fe that run funds that invest in new or existing apartments that have various roles to fill from analysis to sales to project or property management. And, there are probably a lot of little firms doing small infill projects of townhomes or small multi-unit projects.
Maybe the New Mexico Urban Land Institute would be a good place to try to do some networking?
https://newmexico.uli.org/
Thanks so much for the reply! This is great advice
Terrific post!
Likely no surprise to KE that I agree with him.
OT but in the ballpark, the average cost of house in Canada today is $700k. I won't even mention Vancouver.
A generation or two ago a middle-class guy could thrive in Canada, buy a house, enjoy reasonably good government. To be sure, Toronto and Montreal are probably, in many regards, more glamorous or cosmopolitan than ever before ( have not visited in decades).
Can we really say Canada is a success? For who? Living standards are higher than ever?
Would you rather live in dull Canada and make payments on a $200k house, or "cosmopolitan" Canada and make payments on a $700k house?
I use Canada as it seems to neutralize US-based political biases or dogmas.
I will say it again: America's macroeconomists should write 100 op-eds on ways to cut housing costs, for every one op-ed on tariffs or inflation. Not vice versa.
America's macroeconomists are barking up the wrong tree...in the wrong forest.
Canada's macroeconomists should be marching in the street, maybe with pitchforks, about high housing costs.
1. Tariffs are equally bad, like really really bad. https://www.minneapolisfed.org/research/staff-reports/heterogeneous-agent-trade
2. Tariffs directly increase housing costs (lumber being a prime example), and protectionism's close cousin, nativism, deprives the construction industry of its workforce.
3. You will find very few economists, or people who read economists' oped, that agree with current housing policies. So writing YIMBY op-eds has a feeling to "preaching to the choir". Yes, this does not excuse a certain apathy and defeatism, but partly explains it. Ultimately the culprit here is like 60% of the general public, voting not as much out of persuasion but out of self interest, not some sect of intellectuals with bad ideas they might be disabused from.
I have mixed sentiments on tariffs, for a lot of reasons.
Sadly, current events (Russia) show that Western liberal democracies must be able to sustain a long conventional war---the endless demand for old-fashioned material and also the evolving tech arms.
This is not a theory, this is happening right before our eyes in Ukraine.
(One might also ask why Western liberal democracies are, through trade, funneling trillions of dollars into the most illiberal militaries on earth---China, Russia, and Iran. Did trade make Russia less truculent..or did oil money fund Russian aggression and confidence? You tell me).
On other aspects, I am a fan of Michael Pettis, and his book, "Trade Wars are Class Wars." Even Kevin Erdmann should read this book. :)
I am for legal immigration, but not illegal immigration. There is an element of "labor-busting" in bringing into the US large numbers of desperate workers. I grew up in a family that worked, not invested for a living. I worked for a living most of my life (I started a small furniture-making factory, and lasted about 10 years, and during that period I was an employer). My affinity does not make me a nativist.
For whatever reason, orthodox macroeconomists go bananas on the topics of tariffs and inflation. Housing? Not so much.
But housing is many times a more-important topic than tariffs.
"funneling trillions of dollars into the most illiberal militaries on earth---China, Russia, and Iran."
Here you are implying we are sending them money gratis et amore dei, not that we are paying for goods we clearly find better than any alternative. Ie, the Trumpian rhetoric of us "subsidizing" the countries selling stuff to Americans. I can see why someone infamous for never paying his bills would think of consensual transactions in these terms, but why do you?
"Did trade make Russia less truculent..or did oil money fund Russian aggression and confidence? You tell me"
What exactly was the alternative (other than just reduce our consumptions of fossil fuels in general)? Oil is a global commodity with very inelastic demand. Had we refused to buy Russian oil, then they would have just sold it elsewhere. It's rather different for pretty much *any manufactured good*, which is what Trump seems most worried about
"Sadly, current events (Russia) show that Western liberal democracies must be able to sustain a long conventional war---the endless demand for old-fashioned material and also the evolving tech arms. "
Yeah, tariffs don't achieve that. Much like the Jones act did not actually make American shipbuilding more robust, it just made shipping more expensive and the entire economy less productive. Do you understand this is not a theoretical discussion? We have centuries of data. Just stating your policy aim does not magically make your policy any more conductive to that aim.
"There is an element of "labor-busting" in bringing into the US large numbers of desperate worker"
No, there is not. Again, not a theoretical discussion. Except for Borjas and his bad statistical shenanigans, literally every empirical analysis found immigration increases native wages across the whole distribution. Turns out that, quite intuitively, even desperate workers take the highest paying job if they can.
" grew up in a family that worked, not invested for a living. I worked for a living most of my life"
Then I guess you and your family were "desperate" (in the sense, you could not afford to not work). And yet, I suppose you still made normal American wages. Ever wondered why that was?
"But housing is many times a more-important topic than tariffs. "
And you should care a lot more about cancer than silver poisoning. Unless for some reason you or your guardian entrusted your health to a Taoist doctor who insists you ingest silver as a panacea. Then silver poisoning becomes quite a major concern, and you should be pretty resolute in refusing it.
"For whatever reason, orthodox macroeconomists go bananas on the topics of tariffs and inflation. Housing? Not so much. "
Because well, it's *macro*. We are talking about policies affecting, by definition, the entire economy. I agree that all the main American cities choosing the same insane housing policies is not that different from an insane federal policy. But there is a traditional focus on federal for obvious reasons. But yes, I agree with you that the profession, with some notable exceptions like Krugman and Glaeser, showed an unjustifiable incuriosity toward local and state policies. The empirical revolution changed that but macro is the one least touched by it, for various reasons.
Well, we are on different pages on these issues. So it goes.
Great piece!!