Category Archives: Housing

3/2/21: The Cost of Trump’s Failures to Act on Covid19: Case of Housing Market Interventions


COVID-19 pandemic has been associated with a range of deep and dramatic policy interventions, including rolling lockdowns, monetary and fiscal policies interventions, wide ranges of subsidies and supports, but also measures relating to addressing the risk to households and companies arising from the pre-pandemic financial commitments. 

One of the most, potentially, impactful measures has been adoption of a range of policy interventions that aimed to reduce the impact of income shocks on housing availability. In addition to targeting reduction of financial burden of the pandemic shocks on households, the measures also targeted the objective of lowering the risk of spread of the disease via promotion of housing stability.

A recent paper, by Jowers, Kay and Timmins, Christopher D. and Bhavsar, Nrupen and Hu, Qihui and Marshall, Julia, titled "Housing Precarity & the Covid-19 Pandemic: Impacts of Utility Disconnection and Eviction Moratoria on Infections and Deaths Across US Counties" (January 2021, NBER Working Paper No. w28394: looked into the effectiveness of housing markets interventions in the latter context. 

Per authors, "housing precarity, which includes both the risk of eviction and utility disconnections or shut-offs, reduces a person’s ability to abide by social distancing orders and comply with hygiene recommendations."

The authors found that 

  1. "...policies that limit evictions are found to reduce COVID-19 infections by 3.8% and reduce deaths by 11%.
  2. "Moratoria on utility disconnections reduce COVID-19 infections by 4.4% and mortality rates by 7.4%."
"Had such policies been in place across all counties (i.e., adopted as federal policy) from early March 2020 through the end of November 2020, ... policies that limit evictions could have reduced COVID-19 infections by 14.2% and deaths by 40.7%. (emphasis is mine) [While], for moratoria on utility disconnections, COVID-19 infections rates could have been reduced by 8.7% and deaths by 14.8%."

These are genuinely huge numbers. Assuming the effects are non-additive, the lower end estimate of human losses to Covid19 pandemic due to the Trump Administration's failure to act coherently and resolutely in imposing similar policies to support households' tenancy in rental and mortgages markets across the U.S. is in the range of > 40 percent. If the effects are additive, the magnitude of the preventable deaths rises to well over 50 percent.

28/1/20: What Doesn’t Work in NYC Probably Won’t Work in Dublin

As Irish politicians talk rent controls, here is some interesting evidence from NYC's recently passed rent control rules (since June 2019):

  • Sales of apartment buildings in NYC fell by 36 percent in 2019, and that the total spend on purchases fell by 40 percent. Not all of this is down to rent controls changes - NYC is grossly over-supplied in the premium segment of the market and traditionally large-ticket buyers are staying out of the market (Russian and Middle Eastern money) or selling (Russian and Chinese) due to geopolitical and legal ownership threats.
  • "The prices investors were paying for rent-stabilized units—where allowable rent increases are set by the government and usually capped at around 1 or 2 percent per year—fell by 7 percent." More direct evidence for less than 6 months of new rules being in force.
  • "... landlords are reportedly cutting back on the money that they're putting into the buildings that they do own... [as] 69 percent of building owners have cut their spending on apartment upgrades by more than 75 percent since the passage of the state's rent regulations. Another 11 percent of the landlords in the survey decreased investments in their properties by more than 50 percent." More direct evidence things are not going in the desired direction.
  • "The new law's limits on recouping the costs of renovating apartments mean it is often more  financially feasible to leave old apartments vacant."
  • The lower end of the market is probably most hit: "The Commercial Observer reports that the new rent laws are encouraging small- and mid-sized landlords to exit the market entirely, writing that "many property owners have woken up to a world where their buildings are worth 30 to 50 percent less than they were a year ago."" 
  • And another quote: "Middle-class and working-class neighborhoods, ... would be at particular risk."
Thoughts on why this should work any differently for Ireland are welcomed in the Irish mainstream-populist media.

19/12/19: Irish Planning Permissions 3Q 2019: Some Goods, Some Bads

The latest Irish data for Planning Permissions approvals is a mix of some good news, some bad news and some ugly trends. Here is the summary of them for 3Q 2019:

  1. Overall, planning permissions numbers for housing applications are up 4.02% y/y - this is the good news. Better news: cumulative 1Q-3Q 2019 numbers are up 7.12%  on the same period in 2018.
  2. New dwelling planning permissions are up 6.01% y/y - this too is the good news. Also exciting: cumulative 9 months permissions are up 6.33% y/y.
  3. Other new construction ex-dwellings permissions are up 6.29% - another bit of good news.
  4. Extensions and alterations-related planning permissions are up only 1.42%. But this is offset by the cumulative 9 months gain of 7.65% y/y. Which is a nice number.
  5. Bad news: private homes permissions are up only 1.13% y/y in 3Q 2019, and worse news: the same are down massive 5.57% y/y on a cumulative basis for the first 9 months of 2019.
  6. Great news: apartments permissions (for units, not aggregated over schemes) are up massive 80.15% in 3Q 2019 y/y and are cumulatively up 86.81% y/y for the first nine months of 2019.
  7. Average area of the houses for which new permissions are grated is up 0.82% in 3Q 2019 compared to 3Q 2018, but average area of the apartments with new permissions granted is down big time: down 14% y/y in 3Q 2019 and on average down 7.1% in the first 9 months of 2019.
So we are planning more apartments (good), not as significantly more homes (bad), but our apartments planned are getting smaller (bad). 

Now for some other bad news, or trends, rather. 

Given the demographic demand and the state of construction industry in the post-crisis period, we are continuing to under-supply new housing to the markets. Based on the assumed demand for 25,000 new homes annually, cumulative undersupply of new permissions to build residential units since 1Q 2010 currently stands at around 81,900 units and although this number is finally declining (since 4Q 2017), at the current rate of new planning permissions approvals (Q1-Q3 2019 figure), it would take almost 6.5 years to clear the backlog. That is, assuming in the mean time, there is no new recession to knock out the wind from the building and construction sector, and/or no significant inward / return migration to boost demand. Accounting for depreciation at ca 4100 units per annum ( extends this horizon to 10.3 years. 

16/12/19: There is no Inflation, folks… none…

There is no inflation, folks. This is what the Fed been telling us for some time now. And the CPI figures, on aggregate, say the same.

Unless it is if you need health services or health insurance, or if you happen to *want* education. These discretionary items of spending, avoidable by choice of a prudent consumer, are, of course, exceptions to the rule...

Note, of course, the standard inflation measurements of price changes in healthcare are a bit obscure too, as they average-out effects of private insurance inflation by adding old-age and low-income insurance purchases by the state:

But, never mind, as I said above, these are purely discretionary spending items, so we should not let them cloud out the net official results that show 'no inflation'.