Erdmann Housing Tracker

Erdmann Housing Tracker explores the multifaceted reasons behind escalating housing costs, including the impacts of urban regulation, economic models, homeownership trends, and monetary policy. The Substack provides data-driven analyses on inflation, housing supply shortages, regulatory effects, and proposes solutions for improving housing affordability and stability.

Housing Market Trends Urban Planning and Regulation Economic Policy and Inflation Homeownership and Renting Dynamics Monetary Policy Supply and Demand in Housing Global Financial Crisis Demographic Impacts on Housing Construction and Housing Supply Gentrification and Displacement Affordable Housing Strategies

The hottest Substack posts of Erdmann Housing Tracker

And their main takeaways

Updating my priors on missing middle

379 implied HN points • 03 Mar 24
💼 Business Real Estate Housing Market Urban Development Supply and Demand
  1. Missing middle housing developments can be more impactful in addressing housing affordability issues than previously thought.
  2. Simply advocating for 'build more' without considering the complexity and various factors at play may not fully address housing supply constraints.
  3. Increasing the construction of 'missing middle' housing units significantly could play a crucial role in normalizing the American housing market and addressing housing shortages.

Against Agglomeration Economies

252 implied HN points • 14 Mar 24
💼 Business Economics Cities Housing Urban Development
  1. Economists often overemphasize the productivity of cities as the reason for expensive housing, leading to misdiagnoses and biases.
  2. High income gains have been observed in cities that didn't experience significant growth in housing units, challenging the concept of agglomeration economies.
  3. Income disparities among cities have increased over time, with a significant impact from Closed Access displacement, showing the importance of considering factors beyond productivity in city assessments.

The Minneapolis Miracle

252 implied HN points • 23 Feb 24
💰 Finance Housing Construction Economic Trends
  1. Minneapolis experienced a drop in rents in 2021 and 2022 but the correlation between housing construction and rent trends isn't conclusive. It's important to assess data carefully before drawing conclusions.
  2. Auckland, New Zealand, has visible rent decreases due to effective supply-side reforms, contrasting with Minneapolis where the impact of such reforms is less clear.
  3. The correlation between income, new home construction, and rent inflation post-Great Recession reveals unusual patterns, possibly influenced by mortgage suppression policies, highlighting the need for comprehensive data analysis.

Disgusting

337 implied HN points • 07 Feb 24
🌍 World Politics Social Issues Aesthetics Social Change
  1. A community's shared beliefs can drive reactions of disgust and aesthetics are deeply intertwined with morals and affiliations.
  2. Local housing regulations often have classist roots, leading to unintended consequences like increased homelessness and cost of living pressures.
  3. Aesthetics in housing can be used as a tool for status, hindering change and progress in neighborhoods, but changes have historically occurred when societal attitudes shift.

Why more housing appears to make things worse

168 implied HN points • 01 Mar 24
💰 Finance Housing Market Supply Demand Economic Impact Urban Development
  1. About 30-40% of people don't believe increasing housing supply will lower prices or rents.
  2. In cities with limited housing supply, population growth can lead to decreased housing availability, impacting affordability.
  3. Cities that don't build enough housing can have negative impacts on low-income residents, forcing displacement and exacerbating housing affordability issues.
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Another Follow-Up Against Agglomeration

105 implied HN points • 14 Mar 24
💰 Finance Economics Housing Income Construction Mortgage
  1. The mortgage crackdown post-2008 led to a housing shortage, impacting construction of single-family homes in different cities.
  2. There is a correlation between the drop in construction activity after 2008 and metro area incomes, where lower income areas experienced a greater decline.
  3. Trends suggest housing constraints may lead to higher incomes, impacting new single-family home construction and mortgage lending standards across different cities.

More color on the inevitable rent boom of the 2010s.

105 implied HN points • 12 Mar 24
💰 Finance Real Estate Home Prices
  1. The clampdown on mortgage lending in 2008 led to unprecedented rent inflation, reinforcing the relationship between home prices, rent ratios, and access to credit.
  2. The natural experiment since 2008 confirmed that cutting off mortgage access lowered price/rent ratios substantially, leading to collapse in construction and significant rent increases. This situation may have reached a point where new homes could be constructed again on a larger scale.
  3. A regressive rise in home prices occurred post-2008 due to a credit shock affecting existing home values and necessitating a rise in land rents to induce new construction. This situation highlights the impact of housing shortages on rent inflation and home values.

Homeownership is down more than you thought.

252 implied HN points • 02 Feb 24
💰 Finance Housing supply Demographics
  1. Homeownership rates can be misleading if not adjusted for changes in household formation and age demographics.
  2. The reported increase in homeownership rates may be due to an aging population rather than a true rise in homeownership.
  3. The shift towards renting and living with roommates may continue unless changes are made in housing supply and mortgage regulations.

Follow-Up Against Agglomeration Economies

84 implied HN points • 14 Mar 24
💼 Business Economics Housing Market Urban planning
  1. Cities with blocked growth experience a process of migration due to housing costs rising, impacting residents' average incomes.
  2. Affordability in cities like Boston, NYC, and LA could have been maintained if they grew at rates similar to other cities like Oklahoma City or Salt Lake City.
  3. Limited growth approval in certain cities contributes to housing deprivation and lack of affordability, not an overflow of demand.

Why is Debt-to-Income high?

84 implied HN points • 09 Mar 24
💰 Finance Mortgages Debt Housing Market
  1. The debt-to-income (DTI) ratio for households has generally declined since 2007, focusing more on new mortgage borrowers than all families.
  2. Debt payments have increased for older families since lending standards tightened in 2008, delaying when families take on mortgage debt.
  3. Higher rent inflation due to a lack of construction has pushed up mortgage costs in the early years, contributing to high DTIs.

Fear of Affordable Housing

126 implied HN points • 22 Feb 24
💼 Business Real Estate Investing Economics Policy Market Analysis
  1. Developers and builders fear the loss in the value of their land investments if political obstructions to construction were lifted.
  2. Rents are unlikely to decline significantly in a whole metropolitan area due to new housing supply - housing demand is inelastic.
  3. Invest carefully in real estate market based on real trends but don't let fears about collapsing rents impact your views on housing justice or macroeconomic trends.

January 2024 Residential Construction and New Home Sales

105 implied HN points • 28 Feb 24
💰 Finance Housing Market Home Prices Construction Cost Analysis
  1. The divergence between the average price of new homes and existing homes signals obstructed supply in the housing market.
  2. Changes in mortgage rates and market conditions can influence the size and types of new homes being built and sold.
  3. Reforms allowing for more new homes to be built could lower costs and reduce the price of existing homes.

A Brief Technical Review of the Alternative Housing Story

168 implied HN points • 30 Jan 24
💰 Finance Real Estate Economics Housing Market Credit Supply and Demand
  1. Cities like Los Angeles face housing supply issues due to low permit approvals compared to cities like Atlanta and Phoenix.
  2. National housing market statistics can be misleading as there are extreme regional differences.
  3. The myth of a credit bubble causing price bubbles is debunked, with evidence showing price spikes before rise in debt in housing markets.

Accidentally testing NGDP level targeting

126 implied HN points • 06 Feb 24
💰 Finance Monetary Policy Inflation Fiscal policy
  1. Accidentally testing market monetarism, particularly nominal GDP targeting, yielded successful results during economic shocks.
  2. Nominal GDP targeting can help stabilize the business cycle by allowing for counter-cyclical inflation and smoothing disruptions in nominal incomes.
  3. Adopting nominal GDP level targeting could lead to improved productivity and reduced reliance on interest rates in monetary policy discussions.

Mortgage affordability and excess rents

63 implied HN points • 06 Mar 24
💰 Finance Housing Market Affordability Home Prices Market Analysis
  1. Mortgage affordability is affected by prevailing mortgage rates, which can impact transaction volume and buyer costs.
  2. The measure of mortgage affordability must be used with caution as inflation and buyer behavior play significant roles in housing market dynamics.
  3. The rental value of structures versus inflated land value over time can affect the dynamics of home prices and construction, highlighting the complexity of the housing market.

San Francisco and Miami. Hot or not?

84 implied HN points • 20 Feb 24
💼 Business Real Estate Economics Housing Market Urban Development
  1. The Case-Shiller home price index shows Miami hitting new highs while San Francisco has been declining.
  2. Both San Francisco and Miami have low housing production, with Miami consistently slightly higher in construction than San Francisco.
  3. San Francisco's construction activity seems to be waning, despite expectations for increased housing due to YIMBY wins and new state laws.

Hsieh, Moretti, Shiller, and the Rest: Part 3

168 implied HN points • 04 Jan 24
💰 Finance Real Estate Housing Market Home Prices
  1. The rise in home prices is mainly due to obstruction of urban housing rather than urban productivity.
  2. High urban rents have increased nationally post-2008 due to federal lending policies lowering housing production everywhere.
  3. Rising rents explain almost all of the increase in home prices, with excess rent accounting for a significant portion of residential real estate value.

January 2024 Erdmann Housing Tracker Update

63 implied HN points • 18 Feb 24
💰 Finance Housing Market Economic Trends Supply and Demand Inflation
  1. Rising rents are causing rising home prices in the US housing market, with a greater than 1:1 pace.
  2. Density of housing is crucial in impacting housing prices, especially in cities like New York City, where dense neighborhoods are affected by supply shortages and migration trends.
  3. The impact of COVID-19 on housing trends varies across cities, with some areas experiencing temporary relief in housing costs for dense neighborhoods while other cities like New York face complexities in supply conditions.

January 2024 CPI Update

63 implied HN points • 14 Feb 24
💰 Finance Economic Analysis Monetary Policy Inflation Federal Reserve
  1. Reaction to monthly CPI updates often fails to consider the lag affecting the shelter component, leading to surprises in news interpretation.
  2. Market expectations of a Fed rate cut were influenced by the latest report, shifting them further in the future.
  3. Monetary measures like currency in circulation and M2 trended down post-Covid scare, while the Fed's balance sheet shrinks without obvious disruption.

November 2023 Erdmann Housing Tracker Update

105 implied HN points • 15 Dec 23
💰 Finance Housing Market Inflation Real Estate
  1. Data shows that rent inflation has decreased to about 2%, hitting the Fed's 2% inflation target.
  2. There is a hope for rents to gradually decrease towards a reasonable level as construction capacity increases in 2024 and beyond.
  3. Housing prices are settling in a low single-digit trend, making the housing market stable for now.

Hovnanian 2023 Earnings

63 implied HN points • 06 Dec 23
💰 Finance Real Estate Earnings
  1. Hovnanian and Toll Brothers both reported positive earnings for the quarter.
  2. The rhetoric from the companies shifted to focus on excellent results during peak interest rates.
  3. Homebuilders are setting prices based on completion speed rather than speculation.

No, I don't think the Fed drives future yields

105 implied HN points • 05 Oct 23
💰 Finance Monetary Policy Interest Rates Quantitative Easing Market Trends
  1. Forward interest rates are mainly driven by changing economic productivity and sentiment, with the Fed playing a secondary role.
  2. Market sentiment about real future economic activity has a significant impact on interest rates.
  3. Most of the changes in long-term bond yields since 1989 have occurred during Federal Open Market Committee meetings.