HOUSING

Posts tagged with

May 13, 2011, 12:36 pm

The Population Shifts Westward

2:28 p.m. | Updated
The Census Bureau has put together a neat interactive map showing the shifting center of the population, defined as “the place where an imaginary, flat, weightless and rigid map of the United States would balance perfectly if all residents were of identical weight.”

Click here for the full version.

Over the years the center of the population has shifted westward and then southward, reflecting political and economic forces that encouraged the population to migrate: the settling of the Western frontier; immigration patterns; and then the gravitation away from older, colder cities to the Southwest, where looser regulations made it easier to build more housing.

In 1790, the center of the population was in Kent County, Md. By last year, it had moved 872.9 miles away, to Plato, Mo.

Addendum: My colleague Timothy Williams had a fun interview with Plato’s mayor on his town’s newfound fame.

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

May 12, 2011, 12:00 pm

Building Wealth Through Renting

By DAVID LEONHARDT

Reed Saxon/Associated PressBuying a home rather than renting may not be the best financial strategy, a Fed official says.

You have probably heard a version of the idea that renting a house is tantamount to flushing money down the toilet, while buying a home is building equity for your future. Well, it’s wrong, at least much of the time.

You don’t have to listen only to me on this point. Here is Jordan Rappaport, a senior economist at the Federal Reserve Bank of Kansas City, in a paper published last year:

Conventional wisdom has long suggested that homeownership is an effective way to build household wealth. Consistent with this belief, homeownership is often considered to be a key part of the American Dream….

[Yet the] analysis in this article shows that while homeownership often builds more household wealth than renting and investing the saved cash flow, it also often does not. More specifically, for most ten-year occupancies beginning during the 1970s and 1990s, homeownership unambiguously built more wealth. In contrast, for most occupancies beginning during the 1980s, renting and investing unambiguously built more wealth. Renting and investing is also likely to build more wealth than homeownership for many of the occupancies that started in 2000 through 2009. These results suggest that either homeownership or renting and investing can be reasonable strategies for building household wealth.
Read more…

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

May 11, 2011, 9:00 am

Is Another Housing Crash Coming?

By DAVID LEONHARDT

Mark Zandi, chief economist at Moody’s Analytics.

Looking at the relative prices of buying and renting homes in Silicon Valley, Manhattan and a few other places is enough to make you wonder whether parts of the housing market are still due for a crash. To consider that question in more detail, I had a conversation with Mark Zandi, the chief economist at Moody’s Analytics, which provided much of the data for my column:

Q. I’m struck at how much higher the rent ratio still is in many places, relative to its average from 1990 to 2010. It’s about 18 in Washington (relative to a 1990-2010 average of 13), about 17 in Boston (relative to 15) and 15 across all metropolitan areas (relative to 11). Is there any reason to think the ratio should remain higher in the future than it was in the not-too-distant past? Or should we expect the ratio to continue falling in coming years, either through further house-price declines or through rent increases?

Mr. Zandi: I expect the house-price-to-rent ratio to continue falling at least through the remainder of this year and next. National house prices are set to decline by 5 percent this year, and apartment rents are on track to rise by about 5 percent. I do expect house prices to stabilize in 2012, but rents will continue to rise strongly.

Supporting the strong rent growth is declining apartment vacancy rates. Apartment demand is healthy given the better job market and accelerating household formation, particularly among younger households that generally rent, and the ongoing foreclosure crisis which is forcing families from home ownership into renting. Apartment construction is also especially low by historical standards. If this script roughly holds, the house-price-to-rent ratio will be back close to its long-run average in most areas of the country by 2013.
Read more…

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

May 10, 2011, 11:47 pm

Rent vs. Buy, a Longer List

By DAVID LEONHARDT

My column this week revisits the question of whether to buy a home or rent one. In the newspaper, we included a chart showing average rent ratios — the purchase price of a house divided by the annual rent of a similar house — for several metropolitan areas. Here, we include a longer list.

As a rule of thumb, when the ratio is below 15, people should lean toward buying a home. When it’s above 20, they should lean toward renting. When it’s in between, the decision should be based almost entirely on stage of life: Are you ready to settle into a home for at least five years, if not more. As I note in the column, your stage of life should often dictate your decision even when ratios are below 15 or above 20.

For the following metro areas, Moody’s Analytics, which provided us with the data, had numbers going back to 1986:

null

Whither the Housing Bottom?

By CATHERINE RAMPELL

4:54 p.m. | Updated

Today’s Case-Shiller index report showed that housing prices fell for the seventh consecutive month in February. Some analysts now say that a bottom may finally be approaching — for the second time.

It was, after all, two years ago that the index’s long slide appeared to be over, only to bounce up and then fall again:

As of February, the 20-city index was down 32.6 percent from its peak, and 10 metro areas posted new index lows for the third consecutive month. These areas were Atlanta, Charlotte, Chicago, Las Vegas, Miami, New York, Phoenix, Portland in Oregon, Seattle and Tampa. Detroit was the only metro area where prices rose in February, but prices hit a new bottom there just the month before.

Detroit — like Atlanta, Cleveland and Las Vegas — has home prices below 2000 levels.

Depending on when you think the housing bubble really started, this could mean that in some markets homes could be undervalued. But that doesn’t mean prices will soon shoot up.

“The enormous supply overhang of existing homes (particularly factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” Joshua Shapiro, chief United States economist for MFR Inc., wrote in a note to clients.

Addendum: NPR’s Planet Money has presented the chart above operatically, by converting home prices into musical notes. It makes for a sad song.

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

March 30, 2011, 5:31 pm

Foreclosure Prevention: The Treasury’s View

By THE NEW YORK TIMES

An article today, and a follow-up blog post here on Economix, looked at a Treasury effort at the heart of the administration’s foreclosure-prevention effort, the Home Affordable Modification Program. The program is widely considered to have fallen short of expectations, and the Republican-led House voted Tuesday evening to eliminate it. The Treasury makes the case that any judgment of the program must take into account the circumstances in which it has operated. In response to the Times article, Timothy Massad, the acting assistant secretary for financial stability, laid out the Treasury’s view:

Any assessment of the success of the administration’s Home Affordable Modification Program (HAMP) must account for the climate in which the program was launched, the unprecedented nature of the program itself, the authority we have in administering it and the targeted universe of homeowners we set out to help. Today’s New York Times piece, “Foreclosure Aid Fell Short, and Is Fading Away,” is unfortunate in its failure to address many of these realities.

Before HAMP was launched in the spring of 2009, little had been done by the government or private sector to address the historic housing crisis or to provide relief to the significant backlog of homeowners at risk of foreclosure. The administration built from scratch a program to address the tremendous need while appropriately balancing the interests of taxpayers. Mortgage modifications had never been done on such a scale; servicers did not have the people, the procedures or the systems to deal with the crisis; and the housing market was constantly changing.
Read more…

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

March 30, 2011, 9:00 am

Homeowner Help Gone Awry: A Reader’s Guide

By MICHAEL POWELL AND ANDREW MARTIN

Chris O’Meara/Associated Press

Begun with the greatest of hopes, the Obama administration’s foreclosure prevention program has fallen far short of expectations. In today’s paper we examine why this program stumbled so badly.

Envisioned as a companion to the bank bailout, which the administration promotes as a $20 billion profit-making success, the foreclosure program known as the Home Affordable Modification Plan, or HAMP, has achieved nothing like a parallel success.

One example: Over the last two years, banks have filed nine foreclosures for every permanent modification made to a troubled homeowner.

So, what to do?

House Republicans have taken a carving knife to the administration’s foreclosure programs, including HAMP, which was intended to serve three to four million homeowners. They voted Tuesday evening to kill the program. Most Democrats and states attorneys general favor reshaping the program instead. But it’s important to understand that the criticism of the foreclosure program is bipartisan.

There are few places to go to get a flavor of this.

First there is the (yes, bipartisan) Congressional Oversight Panel, whose December report on HAMP is long, in-depth, and cumulatively scathing.

Its chairman, former Senator Ted Kaufman of Delaware, was unsparing in a recent interview. “We have a $700 billion program that basically helped all the banks but really hasn’t done a whole lot for people who in the process of losing their homes,” he said.
Read more…

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

March 29, 2011, 6:00 am

The Census Surprise in New York

By EDWARD L. GLAESER

Edward L. Glaeser is an economics professor at Harvard and the author of “Triumph of the City.”

One of the biggest surprises from last week’s release of Census data was that New York City’s population appears to have grown by only 2.1 percent in the last decade, or about 167,000 people. The city’s overall population, 8.175 million, is 200,000 less than the Census Bureau had estimated for 2009.

Unsurprisingly, Mayor Bloomberg is challenging the Census figure and demanding a recount.

The crucial question is whether the Census missed significant numbers of immigrants in Brooklyn and Queens. If the Census total were left unchanged, New York’s population growth rate would have fallen significantly between the 1990s and the 2000s.

At first blush, this decline would seem quite surprising. After all, the city has continued to surge economically. Between 2000 and 2008 (the latest year available from County Business Patterns) payroll per worker in Manhattan increased by 35 percent (7.8 percent in real terms — that is, after adjusting for inflation) to $102,000. Over the same period, national payroll per worker increased by 25 percent (for no real gain) to $42,000.
Read more…

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

March 16, 2011, 6:00 am

Real Estate Crisis? It Depends on Supply

By CASEY B. MULLIGAN

Casey B. Mulligan is an economics professor at the University of Chicago.

Real estate’s future can often be understood by closely watching the supply of residential and commercial buildings.

In early 2009, employment and gross domestic product were dropping sharply, and real estate values had plummeted from their highs in 2006. The housing market was already in crisis, so it felt right to expect the commercial real estate market to follow.

Nouriel Roubini predicted, “More than 700 banks could fail as a result of their exposure to commercial real estate.” Elizabeth Warren later reported, “There is a commercial real estate crisis on the horizon.”

And journalists frequently referred to a looming commercial real estate crisis.
Read more…

E-mail This
Print
Share Close
- Linkedin
- Digg
- Facebook
- Mixx
- My Space
- Permalink

March 15, 2011, 6:00 am

If the Tea Party Went Downtown

By EDWARD L. GLAESER

Edward L. Glaeser is an economics professor at Harvard and the author of “Triumph of the City.”

Federal construction of highways , such as Interstate 15 in the background above, and the home-mortgage interest deduction have helped push people from urban centers into suburbs such as Corona, Calif., west of Los Angeles.

Ric Francis/Associated Press Federal construction of highways, like Interstate 15 in the background above, and the home mortgage interest deduction have helped push people from urban centers into suburbs like Corona, Calif., west of Los Angeles.

Big cities are not typically Tea Party territory, but if the new Republican members of Congress apply their libertarian principles assiduously to a few key federal policies, they could do much for urban America.

Residents of dense downtowns should urge Tea Partiers to take up the fight against socially engineered suburbia through federal homeownership subsidies and sprawl-inducing federal highway spending.

A strong Tea Party push for choice and charter schools could help city children. Even keeping marginal tax rates low is – in effect, if not in intent – pro-urban, because metropolitan workers typically earn more.

Good libertarians might ask why the federal government has any business promoting particular lifestyle choices, like homeownership. Shouldn’t Americans be free to choose where and how to live without the government prodding them to buy and borrow?
Read more…