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Free Reports Now Available for 939 Markets in the U.S. Market Research Written by Jonathan Smoke    07.02.2008 Intelligence is a bad thing to waste. From our experience, too many otherwise rational professionals make housing related decisions by gut feel due to lack of information. That’s why our tag line is “Don’t just guess.” In order to increase our exposure and help out local chambers of commerce and home building associations, we’ve elected to make a basic report on key housing metrics available for free. You can find them in our aptly titled “Free Reports” under Intelligence on our main site navigation. No comments for this item Read more...

Urbanization and Affordability Economics Written by Bill Russell    06.30.2008 Though urbanization alone cannot explain high home prices, there is a relationship, as can be seen in the graph below. The graph shows the percentage of urban land in each of the 361 census MSAs verses the affordability index. In general, as urbanization increases, affordability declines. This relationship is weak. Urbanization only explains 5% of affordability variation. No comments for this item Read more...   Recap of Week’s News—A Mixed Bag But With Hope of a Bottom for Sales Economics Written by Jonathan Smoke    06.27.2008 What a week for news on the housing front. In one week we’ve had the Harvard Joint Center for Housing Studies release of their annual State of the Nation’s Housing Report, the release of Standard & Poor’s Case-Shiller Home Price Indices for April, the Commerce Department’s release of New Home Sales data, and the National Association of Realtor’s release of existing home sales data for May. The signals weren’t clear and since the financial markets were very negative this week, it would be easy to frame an opinion that the housing data were overwhelmingly negative. I would suggest that would be a bad interpretation. If anything, the mixed results could be construed as more positive that perhaps we are seeing signs of a bottom in sales. No comments for this item Read more...   Unaffordable by Choice Economics Written by Bill Russell    06.23.2008 As you look at markets with high home prices and low affordability, it becomes clear that they are unlike other markets. What causes these markets to have such high home prices? It cannot be labor and building supplies, since they are mobile in a nationwide market, so there is no reason to think they are the cause of isolated high home prices. The cause has to be something unique to local markets and inelastic in supply, and that cause is clearly land prices and therefore, land supply. No comments for this item Read more...   The Cost of Unaffordable Housing Economics Written by Bill Russell    06.19.2008 On Tuesday I showed that, for most of the US, affordability has been stable or improving since 2000 but that some markets have gotten less affordable. Today I want to look at one of the consequences facing those less affordable markets. As can be seen in the graph below, job growth is closely tied to home affordability. The graph groups the 361 largest markets into 10 groups, from most affordable to least affordable. As you move from the most affordable groups down to the least affordable, job growth declines from around 10% since 2003, to around 2%. Clearly, businesses prefer to locate and expand in areas that have affordable homes. No comments for this item Read more...   May Permits and Starts Move Sideways Economics Written by Jonathan Smoke    06.18.2008 The Commerce Department reported May’s permits and starts on Tuesday. Total permits in May declined 1.2% to a seasonally adjusted annual rate of 969,000. Single family permits, which represent the bulk of activity, declined 4% to a seasonally adjusted annual rate of 623,000. Single family starts declined 1% to a seasonally adjusted annual rate of 674,000. No comments for this item Read more...   The Myth of Eroding Affordability Economics Written by Bill Russell    06.17.2008 Declining home affordability is often cited as a problem in the US. But is it really a problem? To look at this question, I will use the affordability index produced by Moody’s economy.com, which can be thought of roughly as the ratio of median home prices to annual income. The most expensive markets have affordability indices above 300, meaning that median home prices are roughly 3 times income. The least expensive markets have indices less than 100, meaning that home prices are on par with annual incomes. As the affordability index declines (increases), the market becomes more (less) affordable. This item includes 1 comment Read more...

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