Insight | November 16, 2016
I bought my first house in the mid-80s in the suburbs surrounding Kansas City. The area was growing rapidly, and it felt like the neighborhood changed every day between the time I left for work and the time I drove home. Neighbors moved in, neighbors moved out. New schools sprouted up so quickly that our children changed elementary schools twice though we hadn't moved. An upscale grocery appeared a few blocks away where there had been an open field, and the grocery anchored the appearance of other stores and services.
一本道最新高清无码We returned to Kansas City this summer along with some of our former neighbors to attend a wedding—the youngest daughter of the only neighbor to remain in the area. We had some time to kill, so we went to take a look at our old cul-de-sac. We were astonished. We remembered a sun-scorched subdivision with lots of spindly "starter" trees. Now all the houses were shaded by tall, leafy trees. In our time in Kansas City, the rapid changes in the buildings and services focused our attention and dominated our conversations. However, it took over 20 years for us to notice the growth of the trees—a growth that completely changed the ambience of the neighborhood.
A similar phenomenon occurs in housing and mortgage markets. The highest-profile happenings often are the highest-frequency and most transitory, while some of the factors that will determine the future of housing evolve so slowly that we tend to overlook them. For instance, Freddie Mac has published a weekly survey of primary market mortgage rates for over forty years. Each week's survey receives prominent coverage in the press, but each week's survey is promptly forgotten when the subsequent week's numbers are announced.1
Three long-standing trends—ones that have been building quietly over decades—ultimately will have more influence on housing than the week-to-week oscillations of mortgage rates or any of a host of other short-term indicators of housing activity. These trends will shape the future of housing by permanently shifting both the demand for and supply of housing. These trends don't grab as many headlines, in large part because their impact builds gradually over long spans of time. Nonetheless, no analysis of the future housing market is complete without considering them.
The three trends that are shaping the future of housing are (1) increasing income inequality, (2) an increasing share of land costs in housing prices, and (3) increasing land use restrictions. In this section, we'll describe each of these trends in turn. In the subsequent section, we'll highlight how these trends are likely to shape the U.S. housing market.
The first, and perhaps most important, trend is increasing income inequality. However, we're not talking about the growing gulf between the very-richest Americans and the majority of the population. High-flying executive pay and the lavish lifestyles of the "1 percent" may be eye-catching, but they ultimately have little impact on the $22 trillion American housing .2 The changes in the income distribution that matter to housing are the shifts in the relative fortunes of low-, middle-, and high-skilled workers. These shifts began decades ago, and they continue today.3
A critical feature of the changing job landscape is the polarization of job opportunities. There are three aspects to this polarization.
households with incomes between two-thirds and two times the median household income as middle class. Using this definition, households with incomes between, roughly, $35,000 and $100,000 qualify as middle class. The share of middle class households fell 10 percentage points between 1975 and 2015, from 51 percent to 41 percent. The share of upper-income households rose 11 percentage points, from 15 percent to 26 percent, while the share of lower-income households fell 1 percentage points, from 34 percent to 33 percent.
一本道最新高清无码This unexpected pattern of change in household income distribution most likely reflects the challenges in tracing changes in the relative wages of low-, middle-, and high-skill workers to changes in the distribution of household income. Consider, for example, Exhibit 7 which displays the household income distributions of these three classes of workers.
一本道最新高清无码 by David Albouy and Mike Zabek appears to confirm that intuition. (See Exhibit 8, Exhibit 9) Measuring housing inequality is not as simple as comparing the square footage of different houses. There are many aspects of the quality of a housing unit, including the amenities of the neighborhood, such as schools and parks, and distance to economic centers. Albouy and Zabek approach this difficulty by calculating estimates of the consumption value of housing services, that is, an imputed rent.
一本道最新高清无码, Owner-occupied real estate including vacant land and mobile homes at market value, series: LM155035015.Q," Federal Reserve Board's Flow of Funds Accounts, September 16, 2016
3 For US trends see: David Autor, "The Polarization of Job Opportunities in the US Labor Market,", April (2010). For International trends see for example : Maarten Goos, and Alan Manning, "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain." Review of Economics and Statisitcs一本道最新高清无码 89, no. 1 (2007): 118-133.
4 To review these trends see: Lawrence Katz and David Autor,"Changes in the Wage Structure and Earnings Inequality," Handbook of Labor Economics, 3A (1999): 1463-1555, see pages 1476-1480 in particular; David Autor, "The Polarization of Job Opportunities in the US Labor Market,", April (2010), see pages p. 22-23,26-28 for particular examples
一本道最新高清无码5 Jung Hyun Choi and Richard Green provide additional of increasing inequality in incomes across U.S. cities. Their research does not rely directly on the polarization of jobs. However they find that MSAs with a greater share of skilled laborers and a higher share of adults with college degrees tend to have more income inequality.
一本道最新高清无码6 David Autor, "The Polarization of Job Opportunities in the US Labor Market,", April (2010), see page 23.
7 Allowing higher-density development would alleviate some of this scarcity by building multiple residences in a spot that previously held only one. However that approach runs smack dab into the land use restrictions discussed in the next section.
8 Matthew Rognlie, "Deciphering the Fall and Rise in the Net Capital Share: Accumulation or Scarcity?," Brookings Papers on Economic Activity Spring (2015): 1-69. Also Albert Saiz,"The Geographic Determinants of Housing Supply," Quarterly Journal of Economics 125, no. 3 (2010): 1253-1296. For example of more strict zoning and regulatory municipalities see: Joseph Gyourko, Albert Saiz, and Anita Summers, "A New Measure of the Local Regulatory Environment for Housing Markets: The Wharton Residential Land Use Regulatory Index," Urban Studies, 45, no. 3 (2008): 693-729
一本道最新高清无码9 Some of this increase may also reflect the increasing cost of building permits, other fees, and regulation generally. See the next section on land use restrictions.
10 Peter Ganong and Daniel Shoag, "Why Has Regional Income Convergence in the US Declined?,", Hutchins Center Working Paper, #21 (2016): 1-67. For supporting papers see: Paul Beaudry, David A. Green, and Ben Sand “Spatial Equilibrium with Unemployment and Wage Bargaining: Theory and Estimation,” Journal of Urban Economics, 79, (2014): 2-19 Jung Hyun Choi and Richard K. Green “Income Inequality across U.S. Cities,” (2016): 2-39
一本道最新高清无码11 The White House recently issued a echoing the conclusions of Ganong and Shoag and proposing reductions in local barriers to housing development.
12 The previously-discussed increasing gap in the real wages of high- and low-skill professions also helped tip the balance.
13 In addition, the associated slowdown in regional income convergence may magnify the impact of the growing gap between high-skill and low-skill real wages.
14 Shifts in the age and race/ethnicity distributions also will have an impact on the homeownership rate, and there is reason to believe those shifts may tend to depress the homeownership rate. The boost in the homeownership rate due to changes in the income distribution may be counterbalanced or outweighed by these other factors. See "Why are the Experts Pessimistic About the Future of Homeownership?
15 For simplicity, this section focuses on house prices, but the same argument extends to rents.
16 In economists' terms, supply has become less elastic.
一本道最新高清无码17 In these data, quarterly house price appreciation in San Francisco is more than twice as volatile as in Dallas. Also the average rate of quarterly house price appreciation in San Francisco is 50 percent higher than in Dallas.
18 Robert Shiller "," New York Times, (New York, NY), July 15, 2016, Christopher Herbert, Daniel McCue, and Rocio Sanchez-Moyano "Is Homeonwership Still an Effective Means of Building Wealth for Low-Income and Minority Households? (Was it Ever?)," Joint Center For Housing Studies, Harvard University, September (2013)
19 Not all conforming loans are sold to the GSEs, but these shares provide a reasonable guide to the GSE share of each income category.
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