Monday, August 25, 2014

Concluding Remarks About Housing Affordability and Supply Restricitions

Forget supply issues. The wages are too damn low at Pacific Standard magazine.

Theme: Labor markets and housing affordability.

Subject Article: "The Affordable Housing Shortage: Considering the Problem, Causes and Solutions."

Other Links: 1. "Why Is the Rent Too Damn High in New York? Don’t Blame Housing Supply."
2. "Recent Owners’ Equivalent Rent Inflation Is Probably Not a Blip."
3. "Zoning and Market Pricing of Housing."
4. "Federal Reserve Bank of Minneapolis: Banking and Policy Working Paper 02-2."

Postscript: All roads take me back to the exceptional real estate demand case of Vancouver:

At the same time, there's a vein of thought that Vancouver's recent focus on rezoning land to provide places to live-especially a downtown condo forest that has become the city's defining feature-has left it with a dearth of office buildings and factory sites where all those new residents might actually be able to find work.

I rarely encounter a description of the tension between residents and businesses over dear urban land. Residents have to work somewhere in order to pay rent. In terms of housing affordability, the Minneapolis Fed study concludes that income (i.e. demand) matters more than supply restrictions. The considerable time I've spent studying this issue, that conclusion makes sense, in a fundamental supply-demand kind of way. To date, everyone who has taken issue with my position argues a point I have conceded. No one has taken aim at the demand side of the equation and the work of scholars such as David Ley (see above article about Vancouver's real estate market). Yes, less restrictive zoning makes land and homes less expensive. That's not a counter-argument to the many posts I've written on the subject.

Tuesday, August 12, 2014

Thursday, August 07, 2014

Housing Affordability and Supply Side Economics

Dr. Doom weighs in on the debate about housing supply versus demand at Pacific Standard magazine.

Theme: Housing affordability geography.

Subject Article: "San Pedro project illustrates a cause of limited housing affordability."

Other Links: 1. "Fleeing New York and San Francisco for ‘Cleveland’."
2. "Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits ? Or Is It Voodoo Economics All Over Again?"
3. "Nouriel Roubini: Professor of Economics and International Business Stern School of Business, New York University."

Postscript: Supply-side economics (e.g. Laffer curve) make intuitive sense, thus appealing to politicians who are pursuing some other agenda. Theoretically, everything is a go. Practically, when academic scrutiny is applied to practice, the suggested benefits disappear. The journey from abstraction to on-the-ground change is a perilous one. The main disconnect I see is taking Glaeser's work (which establishes a link between supply restrictions and housing prices) and assuming that the practice of upzoning (one of many supply-side avenues) will deliver affordable housing. Dr. Doom's cautionary tale teaches us to beware of such claims "about the magnitude of these effects". Glaeser is today's Laffer.

Wednesday, August 06, 2014

Fleeing New York and San Francisco for ‘Cleveland’

Once again tackling housing supply versus demand at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Affordable Housing Draws Middle Class to Inland Cities."

Other Links: 1. "Exotic Romancing at Tennessee Williams Fest."
2. "Urban Geopolitics: Why Chicago Is Dying."
3. "The Way the Modern World Works: World Hegemony to World Impasse."
4. "And the Global City shatters into a million pieces. 'Affordable Housing Draws Middle Class to Inland Cities'"
5. "When Social Scientists Fail Demography."
6. "Illusion of Local: Why Zoning for Greater Density Will Fail to Make Housing More Affordable."
7. "Expat Cuts Hit Hong Kong Luxury Rentals: Market Struggles as Multinationals Trim Packages for Relocated Employees."

Postscript: More from Other Link #7:

The normal summertime surge in demand for high-end apartments in Hong Kong's top neighborhoods was weak again this year as companies changed the way they pay for housing for their expatriate employees and the finance sector continued to struggle.

A shift away from banking and toward retail and other sectors, among companies relocating staff, has pushed down demand. Hong Kong's efforts to cool its housing sector have weighed on the market as well.

Expatriate families relocating to Hong Kong, the main prospective tenants for high-end leases above 80,000 Hong Kong dollars (US$10,300) a month, usually move in the summer months before the school year begins. The start of the third quarter is the "traditional busy time" in the high-end leasing market, according to Edina Wong, senior director of residential leasing at Savills, a real-estate consultancy company. This year, "there's been a minor bump, but not as big as previous years'."

It hasn't been nearly enough to make up for the longer trend: a decline in luxury rental demand by 30% to 40% over the past two years, according to Ms. Wong. "It's a huge drop," she said. "The higher the rental, the quieter it is."

The above quoted passage accomplishes two things. First, putting aside the tax intended to cool the real estate market, the demand slack has a dramatic impact on prices. Second, the overall real estate market is segmented, providing a more nuanced picture of housing affordability in Hong Kong. In my next post, I tackle the disaggregation of housing markets.

Wednesday, July 30, 2014

LeBron James Migration: Big Chef Seeking Small Pond

The return of LeBron James to his hometown doesn't make him a pioneer at Pacific Standard magazine.

Theme: Return migration and economic development.

Subject Article: "Chefs Move Beyond New York."

Other Links: 1. "Cleveland has been on the rebound even before LeBron James news."
2. "Irrational Choice Theory: The LeBron James Migration From Miami to Cleveland."
3. "Who says Cleveland needs saving?"
4. "Fleeing Los Angeles for Harrisburg."
5. "Ironic Migration: Invisible Inflows."
6. "Think people, not place in rural migration."
7. "Dispatches from the Field: Return Migration in Mexico."

Postscript: LeBron James coming home to Northeast Ohio might catalyze more return migration. If others start looking into return migration, I think they will find a well-established trend that defines the current economic epoch. The psychogeographic pivot in Buffalo:

Signs of a new Buffalo became obvious in no time: cranes all around town and local enthusiasm beyond typical civic pride. From its industrial heyday in the early 1900s, Buffalo sank to downtrodden at best. Its population is about half what it was in the 1950s. But today, residents are excited about the makeover underway, and everyone seems to know college graduates moving back to the city, or people coming here for jobs.

Emphasis added. Residents of Rust Belt cities are finally noticing return migrants.

Tuesday, July 29, 2014

Geographic Scale and Talent Migration: Washington, D.C.’s New Silver Line

Amenities don't drive migrants across the country at Pacific Standard magazine.

Theme: You go where you know, knowledge and migration.

Subject Article: "The Silver Line is a new weapon in the local war for talent."

Other Links: 1. "Wisconsin's brain drain and transportation priorities."
2. "Not About LeBron James: Economic Restructuring in Cleveland."

Postscript: I'm working through some ideas about the relationship between geographic scale, labor markets, and migration. My goal is to figure out how to leverage migration patterns for economic development in Northeast Ohio. A numbers of subsequent posts will serve as pieces to the overall puzzle that I will eventually put together in a comprehensive post.