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Tight credit conditions continue to constrain the housing recovery
The expansion of Federal Housing Administration lending has let households with imperfect credit or the inability to make a large down payment maintain access to mortgage borrowing. Rather than excluding such households, lenders have been applying strict underwriting conditions on all borrowers. Clarifying what constitutes approved lending may help relax credit conditions with minimal increase in risk.
Journal Article
Escaping the Housing Shortage
Despite the continuing economic expansion, home construction remains extremely low by historical benchmarks, constrained by the scarcity of undeveloped land in desired locations and land use regulations. Escaping the resulting housing shortage will take many years and likely require a shift toward multifamily construction, the freeing up of single-family homes by downsizing baby boomers, and the faster relative growth of medium-sized metropolitan areas.
Journal Article
A guide to aggregate house price measures
In recent years, the United States, like many other industrialized nations, has experienced wide swings in the growth rate of housing prices. To understand the behavior of housing prices and their influence on the economy, it is crucial to have an accurate measure of aggregate housing prices. In practice, however, it is difficult to develop such a measure. Analysts rely on three approaches to measure the aggregate price of housing. The first methodology simply averages all observed prices. The second looks at repeat sales of the same property. The third treats a house as a bundle of ...
Working Paper
A bottleneck capital model of development
A convex marginal adjustment cost allows the neoclassical growth model to match observed transition paths for output growth, savings, investment, the real interest rate, and the shadow value of installed capital. Such an adjustment cost need apply only to one of two complementary capital inputs with minimal factor income share. The interaction of complementary capital inputs blurs the distinction between capital accumulation and productivity growth.
Working Paper
A productivity model of city crowdedness
Population density varies widely across U.S. cities. A simple, static general equilibrium model suggests that moderate-sized differences in cities? total factor productivity can account for such variation. Nevertheless, the productivity required to sustain above-average population densities considerably exceeds estimates of the increase in productivity caused by such high density. In contrast, increasing returns to scale may be able to sustain multiple equilibria at below-average population densities.
Journal Article
Consumer Price Inflation and Rising Rents in the West
Rising home rents in four western metros have increasingly boosted consumer price inflation.
Journal Article
The affordability of homeownership to middle-income Americans
From 1971 through mid-2007, the nominal national sales price of housing grew almost eightfold. Controlling for inflation, this represented a near doubling in the relative price of housing. The retrenchment in prices that began in 2007 has so far remained small compared to the earlier increase. ; As house prices climbed, many people complained that housing had become unaffordable to middle-income Americans. As early as 1998, newspapers warned that homeownership was becoming a heavy financial burden. As sales price rises accelerated in 2003 and crested in 2006, homeownership was increasingly ...
Journal Article
Why does unemployment differ persistently across metro areas?
Unemployment rates differ widely and persistently across U.S. metro areas. Metros that have experienced high or low unemployment rates in one year have tended to stay that way 10 years and even 20 years later. ; Such variation and persistence raises questions: Why don?t households move from high long-term unemployment metros to low long-term unemployment metros? Why don?t firms in need of workers move from low long-term unemployment metros to high long-term unemployment metros? ; Although such moves may seem sensible, Rappaport finds that a number of factors?a mismatch of worker skills to ...
Journal Article
Downtown Office Use Has Declined, but Some Metropolitan Areas Are Faring Better than Others
Hybrid working has cut demand for office space, especially in the downtowns of medium and large metropolitan areas. However, the degree of this decline has varied considerably across metropolitan downtowns, with demand remaining solid in many.
Working Paper
Moving to nice weather
U.S. residents, both old and young, have been moving en masse to places with nice weather. Well known is the migration towards places with warmer winter weather, which is often attributed to the introduction of air conditioning. But people have also been moving to places with cooler and less-humid summer weather, which is the opposite of what would be expected from the introduction of air conditioning. Empirical evidence suggests that the main force driving weather-related moves is an increasing valuation of weather's contribution to quality of life. Cross-sectional population growth ...