- 2015 Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases, Nancy A. McLaughlin & Stephen J. Small, Presented at Land Trust Alliance Rally 2015, Sacramento, CA, Friday October 9, 2015.
- Do People Shape Cities, or Do Cities Shape People? The Co-Evolution of Physical, Social, and Economic Change in Five Major U.S. Cities, Nikhil Naik, Scott Duke Kominers, Ramesh Raskar, Edward L. Glaeser & César Hidalgo, NBER Working Paper No. w21620 (Paid Access).
- Stabilising House Prices: The Role of Housing Futures Trading, Arzu Uluc, Bank of England Working Paper No. 559.
- Mortgage Debt and Entrepreneurship, Philippe Bracke, Christian A.L. Hilber & Olmo Silva, Bank of England Working Paper No. 560.
- Trend-Spotting in the Housing Market, Nikos Askitas, IZA Discussion Paper No. 9427.
- The Use of Bank Contractors in Mortgage Foreclosure: Contractual Considerations and Liability Concerns, Christopher K. Odinet, Real Property, Trust and Estate Law Section, American Bar Association, 29 Probate & Property (Jan./Feb. 2015).
- Sriracha Shutdown: Hot Sauce Lessons on Local Privilege and Race, Ernesto Hernandez Lopez, Seton Hall Law Review, Vol. 46, No. 1, 2015.
- A Farewell to ARMs? Three Regimes of Adjustable Rate Mortgages, Frank P. Stafford & Bing Chen.
- Is the FHA Creating Sustainable Homeownership?, Andrew Caplin, Joseph S. Tracy & Anna Cororaton, Real Estate Economics, Vol. 43, Issue 4, pp. 957–92, 2015 (Paid Access).
- Spaces for Sharing: Micro Units Amid the Shift from Ownership to Access, John Infranca, Fordham Urban Law Journal, Vol. 43, 2015, Forthcoming; Suffolk University Law School Research Paper No. 15-38.
- Out of the Frying Pan – in to the Fire: The Case of Adjustable Rate Mortgage for Funding of Homes of the Underprivileged, Muhammed Arsalan Aqeeq.
Tag Archives: cities
Friday’s Government Reports Roundup
- The National Resource Network, NYU Wagner and the Urban Institute released a report, Striking a (Local) Grand Bargain, “that offers a new way for cities and anchor institutions to collaborate on projects.” Anchor institutions include universities, medical centers and hospitals.
- The National Academy of Science released a policy note, which found that the life expectancy gap has expanded between the wealthy and the working class.
- The Lincoln Institute released report, Inclusionary Housing, finding that inclusionary zoning can reduce economic segregation.
- The Government Accountability Office released report, Pay for Success: Collaboration among Federal Agencies Would Be Helpful as Governments Explore New Financing Mechanisms, on Social Impact Bonds (SIBs).
Inclusionary Housing and Equitable Communities
The Lincoln Institute of Land Policy has released a policy focus report, Inclusionary Housing: Creating and Maintaining Equitable Communities. The Executive Summary opens,
After decades of disinvestment, American cities are rebounding, but new development is often driving housing costs higher and displacing lower-income residents. For cities struggling to maintain economic integration, inclusionary housing is one of the most promising strategies available to ensure that the benefits of development are shared widely. More than 500 communities have developed inclusionary housing policies, which require developers of new market-rate real estate to provide affordable units as well. Economically diverse communities not only benefit low-income households; they enhance the lives of neighbors in market-rate housing as well. To realize the full benefit of this approach, however, policies must be designed with care. (3)
The report uses the term inclusionary zoning to refer to
a range of local policies that tap the economic gains from rising real estate values to create affordable housing—tying the creation of homes for low- or moderate-income households to the construction of market-rate residential or commercial development. In its simplest form, an inclusionary housing program might require developers to sell or rent 10 to 30 percent of new residential units to lower-income residents. Inclusionary housing policies are sometimes referred to as “inclusionary zoning” because this type of requirement might be implemented through an area’s zoning code; however, many programs impose similar requirements outside the zoning code. (7)
The report notes that
Policy makers are understandably concerned that affordable housing requirements will stand in the way of development. But a review of the literature on the economics of inclusionary housing suggests that well-designed programs can generate significant affordable housing resources without overburdening developers or landowners or negatively impacting the pace of development. (4)
The report is obviously addressing two of the most important issues facing us today — the housing affordability challenge that many households face as well as the increasing stratification of communities by income and wealth.
There is a lot of value in the survey of the academic literature on inclusionary housing policies that is provided by this report. At the same time, there is some fuzzy thinking in it too. For instance, the report states that, “As the basic notion of supply and demand suggests, the addition of new units in a given market will inevitably put some downward pressure on the cost of existing units. But the larger effect tends to be upward pressure on housing costs because new homes are primarily built for higher-income residents.” (12)
This analysis ignores the well-accepted concept of filtering in urban economics. Filtering describes the process by which occupants of housing units go from higher-income to lower-income as the unit ages, becomes outdated and is subject to wear and tear. If higher-income households move to the newest housing, then other another household, typically of lower-income, can move into the vacant unit. If the number of households remains constant, then housing prices should decrease as housing development increases.
Because the real world does not look like an economic model, many people think that new housing causes increased housing prices. But the cause of the increased housing prices is often the same thing that is causing new housing construction: increased demand.
Take NYC for instance. In recent years, it issues permits for 10,000-20,000 or so new units of housing a year, but its population has grown by about 60,000 people a year. Combine this with the fact that new housing construction is both a sign and result of gentrification in a particular neighborhood, it is no wonder people think that housing construction pushes prices higher. While this is an understandable line of thought for the man or woman in the street, it is less so for the Lincoln Institute.
My bottom line: this is worth a read, but read with care.
Wednesday’s Academic Roundup
- Notices of Abatement vs Defects of Title, Roger Bernhardt, 38 Real Property Law Reporter 51 (Cal CEB Mar. 2015).
- Cities and Health: A Response to the Recent Commentaries, Michael K. Gusmano, Victor G. Rodwin, & Daniel Weisz, NYU Wagner Research Paper No. 2658320.
- Property and Secrecy, Amnon Lehavi.
- MSA Geographic Allocations, Property Selection, and Performance Attribution in Public and Private Real Estate Markets, David C. Ling, Andy Naranjo & Benjamin Scheick.
- REIT Leverage and Return Performance: Keep York Eye on the Target, Emanuela Giacomini, David C. Ling & Andy Naranjo.
- Is Poor Financial Literacy a Barrier to Home Ownership?, John Gatherwood & Joerg Weber.
Wednesday’s Academic Roundup
- House Price Impacts of Racial, Income, Education and Age Neighborhood Segregation, David M. Brasington, Diane Hite & Andres Jauregui, Journal of Regional Science, Vol. 55, Issue 3, pp. 442-467, 2015.
- Housing Price Collapse Worsens the Opportunities for Educational Attainment for the Young in Cities Nationwide, I-Ling Shen & James R. Barth, June 8, 2015.
- Pixelating Administrative Common Law in Mortgage Bankers, Kathryn E. Kovacs, 125 Yale L.J. F. 31 (2015).
Renting in America’s Largest Cities
Following up on an earlier graphic they produced, the NYU Furman Center and Capital One have issued a report, Renting in America’s Largest Cities. The Executive Summary reads,
This study includes the central cities of the 11 largest metropolitan areas in the U.S. (by population) from 2006 to 2013: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York City, Philadelphia, San Francisco, and Washington, DC.
The number and share of renters rose in all 11 cities.
The rental housing stock grew in all 11 cities from 2006 to 2013, while owner-occupied stock shrank in all but two cities.
In all 11 cities except Atlanta, the growth in supply of rental housing was not enough to keep up with rising renter population. Mismatches in supply and demand led to decreasing rental vacancy rates in all but two of the 11 cities in the study’s sample.
The median rent grew faster than inflation in almost all of the 11 cities in this study. In five cities, the median rent also grew substantially faster than the median renter income. In three cities, rents and incomes grew at about the same pace. In the remaining three cities, incomes grew substantially faster than rents.
In 2013, more than three out of every five low-income renters were severely rent burdened in all 11 cities. In most of the 11 cities, over a quarter of moderate-income renters were severely rent burdened in 2013 as well.
From 2006 to 2013, the percentage of low-income renters facing severe rent burdens increased in all 11 cities in this study’s sample, while the percentage of moderate-income renters facing severe rent burdens increased in six of those cities.
Even in the cities that had higher vacancy rates, low-income renters could afford only a tiny fraction of units available for rent within the last five years.
The typical renter could afford less than a third of recently available rental units in many of the central cities of the 11 largest U.S. metro areas.
Many lower- and middle-income renters living in this study’s sample of 11 cities could be stuck in their current units; in 2013, units occupied by long-term tenants were typically more affordable than units that had been on the rental market in the previous five years.
In six of the cities in this study, the median rent for recently available units in 2013 was over 20 percent higher than the median rent for other units in that year, indicating that many renters would likely face significant rent hikes if they had to move. (4)
While this report does an excellent job on its own terms, it does not address the issue of location affordability, which takes into account transportation costs when determining the affordability of a particular city. It would be very helpful if the authors supplemented this report with an evaluation of transportation costs in these 11 cities. This would give a more complete picture of how financially burdened residents of these cities are.
Wednesday’s Academic Roundup
- MERS Litigation — Brief of Amicus Curiae the Legal Services Center of Harvard Law School and Law Professors in Support of the Appellee, by Max Weinstein, Melanie B. Leslie, David J. Reiss, Joseph William Singer & Rebecca Tushnet, Brooklyn Law Review, Legal Studies Paper No. 411.
- Why Do Cities Matter? Local Growth and Aggregate Growth, by Chang-Tai Hsieh & Enrico Moretti, NBER Working Paper No. w21154.
- Mobility, Economic Opportunity and New York City Neighborhoods, by Sarah Kaufman, Mitchell L. Moss, Justin Tyndall & Jorge Hernandez, NYU Wagner Research Paper No. 2598566.
- Housing as Holdout: Segregation in American Neighborhoods, by Rashmi Dyal-Chand, Tulsa Law Review, Vol. 50, No. 2, pp. 329-339.
- The Exposure of Mortgage Borrowers to Interest Rate Risk, Income Risk and House Price Risk – Evidence from Swiss Loan Application Data, by Martin Brown & Benjamin Guin, University of St. Gallen, School of Finance Research Paper No. 2015/9.