Banking Trends: Estimating Today's Commercial Real Estate Risk
To survive a decline in commercial real estate prices such as occurred during the financial crisis, how much more capital do banks today need?
The Good, the Bad, and the Ordinary: Estimating Agent Value-Added Using Real Estate Transactions
Despite the prevalence and high cost of real estate agents, there is limited empirical evidence as to the nature or efficacy of their services. In this paper we estimate real estate agents’ value-added when either selling or buying homes using data from three large multiple listing services (MLS). We find that homeowners who forgo a conventional real estate agent, but who list their homes on the MLS via a flat fee broker, sell for between 1 and 4 percent more before commission but take longer to sell and are less likely to complete a sale. However, these average effects mask a significant ...
Marijuana Industry Has Boosted Economic Activity in the Tenth Federal Reserve District
Since Colorado became the first state to open recreational marijuana stores in January 2014, the marijuana industry has expanded across the nation and to other states in the Tenth Federal Reserve District, including Missouri, New Mexico, and Oklahoma. Within the Tenth District, this expansion has increased commercial real estate demand and tax revenues and created jobs, but has also presented challenges for the industry and local communities.
Rent inflation remains on track to slow over the coming year
Measures of market rents—the rental rate for new leases—increased about 15 percent in 2021. The surge occurred despite a modest increase of less than 4 percent in the rent and owners’ equivalent rent (OER) components of the most commonly watched U.S. inflation gauges, the Consumer Price Index (CPI) and personal consumption expenditures (PCE). A forecast of rent inflation using the Single Family Rent Index from CoreLogic, a financial analytics firm, would have accurately predicted this path a year in advance and currently anticipates rent inflation slowing to below 6 percent by the end ...
Holding Space: Underlying Real Estate Conditions for Nonprofits in the Los Angeles Region
Over the past decade, rising real estate costs have led to displacement of low-income residents and small businesses from Los Angeles’ changing neighborhoods. This trend raises questions about the long-term ability of nonprofit organizations that operate in these neighborhoods to remain in place. The recent economic downturn related to the COVID-19 pandemic makes understanding the baseline conditions that nonprofits face in the real estate market even more critical.Previous research suggests that some San Francisco Bay Area nonprofits, particularly those that rent operating space, have ...
On the Nexus of Monetary Policy and Financial Stability: Novel Asset Market Monitoring Tools for Building Economic Resilience and Mitigating Financial Risks
In this note we argue that asset pricing bubbles are an important source of financial instabilities. First, the literature has tended to overlook bubbles and their consequences under the premise that they are hard to detect in real time. We suggest that novel statistical techniques allow us to overcome those prejudices as they provide valuable signals of emerging exuberance in real‐time. Second, monetary policy has been slow to recognize that financial instability arising from bubbles can have adverse effects on the transmission mechanism of monetary policy itself and on the types of risks ...
Real Estate Helped Drive Wealth Gains during the Pandemic
Real estate assets drove wealth higher for many, particularly among Black and Hispanic households. But the racial/ethnic wealth gap remains wide.
What is driving the differences in inflation across U.S. regions?
In this article, we explore differences in inflation dynamics across U.S. regions. Looking independently at the impact of consumption patterns and inflation by expenditure categories, we find that recent gaps across regions have existed largely because of different regional inflation rates for the housing category. Yet we also find that overall inflation is very highly correlated across regions.
Location, location, location: Mortgage rate impact varies by metro
The role of individual housing markets and their sensitivity to mortgage rate changes play an important part in understanding the impact of higher rates.
Macroeconomic Effects of China's Financial Policies
The Chinese economy has undergone three major phases: the 1978?97 period marked as the SOE-led economy, the 1998?2015 phase as the investment-driven economy, and the new normal economy since 2016. All three economies have been shaped by the government financial policies, defined as a set of credit policy, monetary policy, and regulatory policy. We analyze the macroeconomic effects of these financial policies throughout the three phases and provide the stylized facts to substantiate our analysis. The stylized facts differ qualitatively across different phases or economies. We argue that the ...