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

The consumption basket we call "housing"

63 implied HN points • 28 Sep 23
💼 Business Housing Market Urban Development Housing supply
  1. In expensive cities, people oppose public amenities because they can lead to displacement when bundled with scarce housing.
  2. A city's housing demand can be categorized into shelter, neighborhood amenities, metropolitan area scarcity, and endowments.
  3. Metro area scarcity causes prices to rise uniformly across neighborhoods, impacting affordability for households with lower incomes.

Inflation is Over

105 implied HN points • 16 Mar 23
💰 Finance Economics Inflation Monetary Policy Housing supply
  1. Inflation may have ended, as data shows a decline in prices over the past months.
  2. Removing the shelter component from inflation measurements may lead to a more accurate CPI.
  3. Addressing the housing supply issue could resolve misconceptions around monetary policy and inflation.

No, Biden isn't punishing you for your high credit score.

84 implied HN points • 02 May 23
🇺🇸 U.S. Politics Policy Media Economy Housing Partisanship
  1. There was misinformation spread about Biden increasing fees for good credit homebuyers to subsidize those with risky credit scores.
  2. The misinformation was fueled by cherry-picked data and politically charged language in articles from various news sources.
  3. The real issue at hand is an actuarial decision about fee structures, and the impact on mortgage access post-Great Recession.
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CEA: Inflation was transitory.

42 implied HN points • 01 Dec 23
  1. The White House Council of Economic Advisors analyzed recent inflation and concluded that 80% was due to transitory supply-side factors.
  2. Quarterly data shows that inflation has trended downward, especially in core PCE excluding housing, indicating disinflation ahead.
  3. Optimism for 2024 and beyond stems from improvements in supply chain capacity and potential price drops, leading to moderation in rents and consumer inflation.

Housing Supply, Costs, and Urban Value (Part 1)

63 implied HN points • 07 Aug 23
💰 Finance Housing Costs
  1. The housing supply greatly impacts urban land values.
  2. Cities like Austin, Seattle, and Los Angeles have different housing supply-demand dynamics.
  3. The growth and affordability of cities are influenced by the balance between housing supply and demand.

Are housing expenditures stable over time?

84 implied HN points • 29 Apr 23
💰 Finance Housing Analysis Trends Ownership
  1. Housing expenditures have not been stable over time, with renters seeing a 25% rise in relative spending over 40 years.
  2. Owner expenses in data are overstated, and assessing true housing costs involves factors like inflation, real returns, and leverage.
  3. Americans are spending more on housing, leading to real compromises and budget constraints, with a net increase in spending despite attempts to cut back on real consumption.

Inflation was obviously transitory (postscript)

42 implied HN points • 22 Nov 23
  1. Interest rate targets are a poor way to communicate monetary policy.
  2. Market reactions indicate expectations of transitory inflation.
  3. Nominal GDP growth may be a better indicator of monetary policy.

Upside Down CAPM, Part 3A: Sympathy

42 implied HN points • 08 Nov 23
  1. Interest rates mainly reflect sentiment, not control
  2. Upside-down CAPM could have guided policy decisions during the Great Recession
  3. Sympathy in policy-making can help prevent financial crises

The Zoning Theory of Everything

84 implied HN points • 19 Mar 23
🇺🇸 U.S. Politics Policy Ideology Government
  1. The housing problem is considered a central issue affecting various aspects of society.
  2. Addressing the housing problem is seen as a key to solving multiple interconnected challenges.
  3. There is a growing movement recognizing the significance of 'closed access' cities and advocating for necessary changes.

Upside Down CAPM, Part 2: The value of growth

42 implied HN points • 31 Oct 23
  1. Expected returns on at-risk capital are stable over time.
  2. Risk-free interest rates are not a useful guide for estimating fair value of other assets.
  3. The value of growth in at-risk capital is positively correlated with equity risk premium.

Upside Down Capital Asset Pricing Model, Part 1

42 implied HN points • 30 Oct 23
  1. Interest rates are not a causal factor that changes asset prices.
  2. Expected returns on assets are stable over time, about 6% plus inflation.
  3. Capital markets involve two forms of ownership: 'at risk' ownership and 'deferred consumption', with their prices being inversely related.

September 2023 Consumer Inflation and Homebuilders

42 implied HN points • 13 Oct 23
  1. The Fed's actions may have helped stabilize rent inflation and construction market
  2. High reported inflation might not accurately reflect the current economic situation
  3. Homebuilders might benefit from stable inflation and high prices on housing supplies

It's never overbuilding. More detail.

42 implied HN points • 12 Oct 23
  1. Overbuilding wasn't linked to high vacancies after 2008.
  2. Vacancies surged due to economic crashes, not optimistic building.
  3. Annual housing production may need to increase to meet demand.

Myths of the Housing Bubble, a continuing series

84 implied HN points • 10 Feb 23
  1. Understanding myths about past housing booms is crucial for creating a fair housing market.
  2. The correlation between investor activity and rising home prices in Atlanta needs to be viewed in the context of past policy errors.
  3. Debates on housing need to be grounded in empirical evidence to address the root causes of housing market issues.

More on House Sizes and Costs

42 implied HN points • 02 Oct 23
  1. The housing market provided more new square footage during the 2000s but the boom was not as significant when adjusted for growth over time.
  2. Average new home sizes have remained relatively constant since 2003, with a mix of single-family homes increasing in size while multi-unit sizes have declined.
  3. Housing costs have increased with families paying more for less space, which is attributed to higher development and land costs due to urban land use obstructions.

March 2023 Residential Sales

63 implied HN points • 26 Apr 23
💰 Finance
  1. Residential sales indicate a bullish trend.
  2. Homes being sold are likely to be completed timely, showing a rise in construction activity.
  3. Measures like months' supply are declining as construction schedules move back to normal.

More on Residential Sales Trends

63 implied HN points • 31 Mar 23
💼 Business Real Estate Market Trends Data Analysis
  1. High cancellation rates during Covid were not as alarming because of the booming sales at that time.
  2. Interest rates are not a reliable indicator for forecasting home sales and prices.
  3. Decline in cancellations and stable delivery numbers suggest a more positive outlook for the housing market.

"Price is the Medium Through Which Housing Filters Up or Down": Part 2

84 implied HN points • 19 Nov 22
  1. Home prices reflect structural issues and trends, not just short-term cycles.
  2. In cities with restricted housing supply, high prices burden low-income families the most.
  3. Unsustainable housing prices are often caused by resistance to displacement rather than excessive demand.

June 2023 Residential Construction Update

42 implied HN points • 20 Jul 23
  1. The housing market is expected to remain resilient despite economic uncertainties.
  2. There are reasons to believe that the economy will perform well in the future.
  3. Trends in residential construction are showing continuity.

Countrywide Financial Didn't Cause the Financial Crisis

42 implied HN points • 19 Jul 23
  1. Countrywide Financial was not the main cause of the financial crisis, despite being a leader in subprime mortgage lending.
  2. The housing market crash was not solely due to reckless lending but also involved factors like inadequate supply and credit access.
  3. The narrative of the housing market crash being driven by reckless financiers is not entirely supported by the data, which shows a more complex picture.

June 2023 Erdmann Housing Tracker Update

42 implied HN points • 17 Jul 23
  1. Home prices are currently supported by rising rents, rather than low mortgage rates.
  2. In order to stabilize rent inflation, more housing completions are needed annually.
  3. Historically, periods of moderating rents were associated with higher levels of home construction.

Comparing housing cycles since the 1980s

42 implied HN points • 07 Jul 23
  1. Housing cycles experience fluctuations over time, leading to perceived extremes in the market.
  2. Smith's work in experimental economics can reinforce the perception of housing market bubbles.
  3. Behavioral and macroeconomics may utilize variables that provide theoretical insights but can be impractical in real-world application.

A Review of Gjerstad and Smith, Part 4

42 implied HN points • 06 Jul 23
  1. The impact of tracking home prices on inflation rates
  2. Challenges with measuring wealth accurately due to housing market dynamics
  3. The complexity of conducting natural experiments in economic policies

More on May 2023 Residential Construction

42 implied HN points • 22 Jun 23
  1. Spike in housing starts in May might not be as positive as it seems due to stalled projects and financing issues.
  2. Architectural billings are indicating a bearish trend for the year, especially for multifamily housing.
  3. A deeper analysis is needed to understand the complexities of the May 2023 residential construction data.

May 2023 CPI Inflation Update

42 implied HN points • 15 Jun 23
  1. Inflation has been over for almost a year, despite concerns from policymakers and critics.
  2. Fed rate hikes helped bring down inflation levels.
  3. Rising Fed policy rates led to higher mortgage rates and long-term rates.

Home Price Trends Point to a Worsening Lack of Supply: Part 1

42 implied HN points • 31 May 23
  1. One way to identify supply-deprived markets is by looking at the negative correlation between population growth and housing production.
  2. After 2008, there was a shift to inelastic supply in housing, affecting various factors like price, rent, and migration.
  3. Overly regulated mortgage access is likely the cause of the shift to inelastic supply, affecting new housing production in areas with lower incomes.

New paper!

42 implied HN points • 30 May 23
  1. Regional housing supply impacts the cost of homes and leads to predictable patterns based on incomes.
  2. Changes in housing trends post-2008 indicate a universal shift towards inelastic supply.
  3. Overly regulated mortgage access is likely a significant factor in the supply shortage, especially in areas with lower incomes.

Housing is productive investment

42 implied HN points • 26 May 23
  1. Housing is a productive investment, not an unproductive asset.
  2. Offshoring moves production to where wages are rising, not just where wages are low.
  3. Building more homes in expensive cities is like an internal reshoring that can benefit both residents and the economy.

April 2023 New Home Sales and Construction Updates

42 implied HN points • 24 May 23
  1. The trends in new home sales and residential construction are continuing in April 2023.
  2. The author is combining the monthly Census Bureau updates for new home sales and residential construction.
  3. Readers can access the full post archives with a 7-day free trial to Erdmann Housing Tracker.

The shifting sands of observation

42 implied HN points • 20 May 23
  1. Defaults on mortgages are primarily driven by negative life events rather than negative equity.
  2. The Great Recession was caused by tight monetary policy, not the housing bust.
  3. The traditional narrative of the housing bust involving unqualified borrowers and overpriced homes has been overshadowed in discussions about defaults.

Interview with James Foord at the Pragmatic Investor

21 implied HN points • 05 Dec 23
  1. The interview discusses EHT topics like housing market insights in 2024.
  2. Kevin Erdmann is the author of the interview.
  3. There is a Youtube link provided for the interview.

Look at that beautiful yield curve.

21 implied HN points • 04 Dec 23
  1. JPow continues to post successful monetary policy decisions.
  2. Consumer inflation has been at target for 16 months.
  3. Housing completions have been consistent, even pre-Covid.

Inflation was obviously transitory

21 implied HN points • 22 Nov 23
  1. There is a consensus that transitory inflation lasted longer than expected and had lasting effects.
  2. Inflation declined despite loose Fed policy, not due to rate hikes.
  3. The market expected inflation to decline, and it did, even as faith in the decline wavered.

October 2023 Residential Construction

21 implied HN points • 21 Nov 23
  1. There have been recent spikes in construction times for single-family and 2-4 unit structures.
  2. The increase in construction times is attributed to factors like land use regulations and project size.
  3. Land use regulations have worsened over the past 25 years, impacting construction times for various types of projects.

October 2023 Erdmann Housing Tracker Update

21 implied HN points • 17 Nov 23
  1. Rent trends are influenced by a 2%+ excess rent inflation due to supply issues, changes in general price levels, and temporary fluctuations post-Covid.
  2. Zillow rent estimates include a 0.8% compositional adjustment, making them slightly higher than CPI inflation.
  3. Recent trends suggest rent disinflation may be settling out, but there's still work to be done for rents to reconverge with general inflation levels.