Meanwhile, in my day job…
Lots of things conspire against me writing as much as I’d like around here, and one of them is my job. So I’m pleased to announce that I can at least sort of combine those two activities. Here’s the result.
Ryan Noonan
Ryan Noonan is an economist with a small federal agency. Fields in which he considers himself reasonably well-informed: literature, college athletics, video games, food and beverage, the Supreme Court. Fields in which he considers himself an expert: none. He can be found on the Twitter or reached by email.
Totes +1.
This is awesome, Ryan. Thank you. Will read with pleasure and report back.
And I did not realize you do economics for Uncle Sam. Thank you for your service. I appreciate it; sharing useful information is one of government’s greatest functions, one we don’t appreciate enough.Report
Okay, I’m back.
And I think this is terrific news; and in one very crucial area — skilled workforce development.
In the early 2000’s, I did a lot of reporting on the skilled labor pool; plumbers, electricians, welders, pipe fitters, etc. The average age then was about 47, and despite growing numbers of jobs, not a lot of young people stepping in to fill learn the trades. There was, after I stopped reporting, some growth, and then the economy collapsed, putting lots of the replacement tradesmen out of work. The longer the recession drags on, the longer the housing market slumps, the more I worry.
So a healthier market, for skilled trademen, is a good thing. A world where plumber are scarce on the ground frightens me.Report
I just heard this on NPR! Once again, The League is ahead of the news.
Good job, Ryan.Report
I’ve been following real estate since about 2000 and I’m not convinced this is a real recovery, though. Here and here.
It’s certainly a recovery, but it’s not based upon a real positive change of household income for the average household in most of those markets. That means it’s extra money pouring into this section of the economy, more than a real rising tide.
More like a big wave.Report
Another interpretation is that prices have dropped enough to be in line with some buyer’s income. The change can be in either direction, increasing incomes or prices that have dropped to the point they’re more in line with at least some potential buyers.Report
A better interpretation is that substantial portions of the market have become more liquid.Report
No, that doesn’t work. Because the average home price is still way outside of the historical (pre-2000) normal baseline for market price.
Houses are still going for much more than the average Joe (or Jane) can afford on their salary, given geographical conditions.
I don’t think this is a new normal, I think this is a secondary bubble.Report
2002 pricing isn’t horribly bubbly. And you’re forgetting the interest rate thingy. If interest rates are low, you can afford more home per salary.
Nobody’s calling bubble… yet. Give it time.Report
A dirty check would be to compare to rents.
In the end, houses are shelter and shelter costs move in rough tandem, unless acted upon by something beyond demand for shelter. (such as speculation in real estate).
If the housing prices were, in 99, say 15% more per square foot than apartment rentals, you can just just see if they’re around 15% more now than current rentals.Report
” real positive change of household income for the average household”
… wait, you’re actually expecting this to happen?
Housing is correcting for being “undermarket” (due to systemic problems).
If it actually starts being overmarket again, then you can call bubble.
Remember, there’s another reason that housing prices go up: population growth.Report
Housing prices don’t go up because of population growth, directly. If the population grows and the income doesn’t, you see higher volume housing, not increased housing prices per unit.
It doesn’t matter how many people want to buy the thing, if they can’t afford the thing at the price offered.
Right now, most homes are being purchased as income properties. Which is itself something of a problem, but the rates are low enough that it’s possible that the investors won’t be totally screwed when the bubble pops (because they’ll maybe still be able to rent the place without taking a loss).
But they’re only being bought because rates are low and because there’s no place else to put money. What are you going to do, buy gold?Report
Right now, most homes are being purchased as income properties. Which is itself something of a problem, but the rates are low enough that it’s possible that the investors won’t be totally screwed when the bubble pops (because they’ll maybe still be able to rent the place without taking a loss).
Depends on the intent of the investment. For flipping, then I’d agree with a bubble. For 2nd home, (I live in a town where 20% of the housing stock is second homes), I’d wonder if it’s fear of a stock bubble — people looking to invest capital might look to housing rather then a roaring market that feels overpriced. The best scenario here is people buying properties the rental market, because people who aren’t buying houses need rental homes in which to live.Report
“Income properties”? How are you seeing that? I was reading that single family home starts are on the rise.
Smart people buy natural gas.Report
Investors can buy single-family homes as rental properties. I’m not sure if it’s a good investment or not but it’s certainly happening.Report
I tend to agree with you, Patrick. People are buying stuff because the interest rate is artificially low. It’s a good time to buy a house if you intend to stay in it for a while. But I suspect that once interest rates start to rise again, the prices will go down.Report
Yup, house makes good inflation hedge right now.Report
Ryan, it would appear, is in the part of the government which prints “old news” not the part of the government that reads the news before it is printed. ;-PReport
Technically, I was in the room with the under secretary when Census released the data. I saw it almost literally before anyone else on the planet. The vicissitudes of government public affairs being what they are, my post was released about 30 hours after that briefing took place.
The real point of the post, though, is to get people talking about this notion of aggregate new housing inventory. It’s an indicator Census always reports internally, but it’s never used externally. We’re hoping we might play some part in changing that.Report
I suppose having an actual Secretary of Commerce might be a helpful first step in that direction.Report
Frankly, and do not assume I am speaking on behalf of anyone other than myself as a private citizen, I am pretty strongly in favor of keeping the one we have and just giving her the title. From what I can see on the internet, I am perhaps not likely to get my wish.Report
Well that depends on if the next nominee is friends with Hamas.
And Blank was head of ESA before her current gig, wasn’t she?Report
I meant the Federal Reserve… 😉
This seems like the sort of thing that Calculated Risk posts all the time. Am I wrong on that?
I’m wondering what the difference is between your data and theirs… (if any at all.)Report
Ryan,
Weighing in a bit late here, but I just wanted to say “hey, that’s good news!” and “cool work, go Ryan!” I’d have to chew on that concept of aggregate new housing inventory for a while before I could say something intelligent about that, but I’m intrigued.Report
Here’s an interesting take on the depressed housing market as a problem, though I’d share it here:
http://www.theatlantic.com/business/archive/2013/02/whats-americas-biggest-problem-right-now-its-not-washington-its-houses-houses-houses/273422/
It would suggest improved housing markets signal economic recovery in a good way.Report