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Does anybody have an economist that they like who is writing intelligently about housing pricing right now? You see 27% in SV, and almost 20% in subs like Oakl

Does anybody have an economist that they like who is writing intelligently about housing pricing right now? You see 27% in SV, and almost 20% in subs like Oakland and it's hard not to remember the couple of years leading up to the 2007 crash when word on the street was "buy now or you will never be able to afford" I bought on that advice and took a 35% haircut in a good market a few years later.

ebikelaw 9y ago
The idea that housing always goes up in price is nonsense so you’d be right to be skeptical of “get in now” urges. If anybody said that about stocks they’d go to jail but for some reason we don’t regulate marketing if housing-as-security the way we regulate actual securities. The only reason housing prices are skyrocketing is because we’ve built a protective legal regime around incumbent land owners. The market can’t function so the price goes up. Just as an example I’d be very pleased to build a small stack of flats on my Oakland property, say four units, but the law doesn’t permit that. On my block there’s a 1938 building with 22 apartments on the same sized lot as mine. So we used to allow it, and clearly it’s within the character of the neighborhood, to borrow a phrase from the NIMBYs, but we’ve just outlawed that kind of building. As soon as the regulatory environment gets fixed, supply is going to explode and prices will fall.
- usaar333 9y ago
  But a lack of supply doesn't explain rents being comparatively flat over the past 2 years. The prices going up imply either: 1. Market has strong belief that housing construction will stop in the future (i..e regulatory environment actually worsens), leading to surge in rents. 2. Irrationality.
  - conanbatt 9y ago
    There are many reasons why rental and house price can diverge. More people living in the same space, a change in demographics, marginal tax rates. Markets have an irrational component, but seemingly irrational behavior is more often misunderstood rational behavior than the other way around.
  - ebikelaw 9y ago
    I think you’re drawing conclusions that might not be warranted by this data. The rent survey is fundamentally different because it’s rents reported by large apartment management firms, not all private leases. We don’t really know what’s going on in the rent-a-house market. On the sales side the data is all recorded sales, which are public records.
    - usaar333 9y ago
      Which rent survey are you referencing? I'm going off https://www.zillow.com/santa-clara-county-ca/home-values/ https://www.zillow.com/santa-clara-county-ca/home-values/ which AFAIK uses all rent postings. FWIW, there's also intuition backing this. e.g. go to zillow and click on units for rent in Cupertino. And be shocked that their estimated purchase prices are ~40x yearly rent. (It's difficult for me to see how that just isn't irrational pricing)
givehimagun 9y ago
Julian Castro is doing a seminar series at the LBJ Library that I've been attending. I think they livestream them as well on Facebook. They are definitely worth a watch and address issues of housing prices, services, gentrification, how to approach them from a government and legal perspective. https://www.eventbrite.com/e/policy-seminar-series-with-julian-castro-policy-matters-tackling-public-issues-through-the-lens-of-tickets-41398275356 https://www.eventbrite.com/e/policy-seminar-series-with-juli...
kaycebasques 9y ago
Not housing specifically (although he does talk about it every now and then), but I find Doug Noland’s analyses on global credit dynamics to explain a lot about what I see in the world around me. From what I’ve heard, he was also on the right side of understanding the severity of the subprime crisis (haven’t read the blogs around that time, though). http://creditbubblebulletin.blogspot.com/2018/02/weekly-commentary-grand-crowded-trade.html?m=1 http://creditbubblebulletin.blogspot.com/2018/02/weekly-comm...

ebikelaw 9y ago

The idea that housing always goes up in price is nonsense so you’d be right to be skeptical of “get in now” urges. If anybody said that about stocks they’d go to jail but for some reason we don’t regulate marketing if housing-as-security the way we regulate actual securities. The only reason housing prices are skyrocketing is because we’ve built a protective legal regime around incumbent land owners. The market can’t function so the price goes up. Just as an example I’d be very pleased to build a small stack of flats on my Oakland property, say four units, but the law doesn’t permit that. On my block there’s a 1938 building with 22 apartments on the same sized lot as mine. So we used to allow it, and clearly it’s within the character of the neighborhood, to borrow a phrase from the NIMBYs, but we’ve just outlawed that kind of building. As soon as the regulatory environment gets fixed, supply is going to explode and prices will fall.

usaar333 9y ago
But a lack of supply doesn't explain rents being comparatively flat over the past 2 years. The prices going up imply either: 1. Market has strong belief that housing construction will stop in the future (i..e regulatory environment actually worsens), leading to surge in rents. 2. Irrationality.
- conanbatt 9y ago
  There are many reasons why rental and house price can diverge. More people living in the same space, a change in demographics, marginal tax rates. Markets have an irrational component, but seemingly irrational behavior is more often misunderstood rational behavior than the other way around.
- ebikelaw 9y ago
  I think you’re drawing conclusions that might not be warranted by this data. The rent survey is fundamentally different because it’s rents reported by large apartment management firms, not all private leases. We don’t really know what’s going on in the rent-a-house market. On the sales side the data is all recorded sales, which are public records.
  - usaar333 9y ago
    Which rent survey are you referencing? I'm going off https://www.zillow.com/santa-clara-county-ca/home-values/ https://www.zillow.com/santa-clara-county-ca/home-values/ which AFAIK uses all rent postings. FWIW, there's also intuition backing this. e.g. go to zillow and click on units for rent in Cupertino. And be shocked that their estimated purchase prices are ~40x yearly rent. (It's difficult for me to see how that just isn't irrational pricing)

givehimagun 9y ago

Julian Castro is doing a seminar series at the LBJ Library that I've been attending. I think they livestream them as well on Facebook. They are definitely worth a watch and address issues of housing prices, services, gentrification, how to approach them from a government and legal perspective. https://www.eventbrite.com/e/policy-seminar-series-with-julian-castro-policy-matters-tackling-public-issues-through-the-lens-of-tickets-41398275356 https://www.eventbrite.com/e/policy-seminar-series-with-juli...

kaycebasques 9y ago

Not housing specifically (although he does talk about it every now and then), but I find Doug Noland’s analyses on global credit dynamics to explain a lot about what I see in the world around me. From what I’ve heard, he was also on the right side of understanding the severity of the subprime crisis (haven’t read the blogs around that time, though). http://creditbubblebulletin.blogspot.com/2018/02/weekly-commentary-grand-crowded-trade.html?m=1 http://creditbubblebulletin.blogspot.com/2018/02/weekly-comm...