Monday, September 9, 2019

Part 16: The conclusion to my series on housing affordability

A conceptual starting point for housing affordability and public policy

Here is an excerpt, but the post is short, so please click the link if you're interested.

Understanding this value and the systematic returns that homes provide leads to a somewhat paradoxical conclusion that (1) homeownership is usually a good investment, and (2) the smaller the investment, the better. In other words, an owner-occupied home with a low rental value can be a great investment, but the downside is that it requires living in a home with a low rental value.

The various posts in this series have considered housing affordability with a focus on rent. This focus has led me to the following policy suggestions: we should (1) maintain relatively high property taxes, (2) reduce or eliminate income tax benefits of homeownership, including the non-taxability of the rental value of owned units, (3) eliminate urban supply constraints, (4) reduce regulatory barriers to mortgage lending, especially in low tier markets, and (5) encourage innovation in real estate markets that reduces transaction costs.

I hope you have found some interesting ideas in the series.  I found it useful and enjoyable to systematically lay out a conceptual review of these ideas.

Here is a link to the whole series.


  1. Hearty congratulations all around.

    If America's macroeconomist really want to raise living standards and fight inflation, they will start obsessing with housing shortages and not labor shortages.

  2. That was nice reading!

    Do you retain copyright over the pieces? You could stick them all together on one page (and/or a pdf) and make it available for easy dissemination perhaps,

    1. Thanks Matthias.

      We might do something like that.

  3. This is from Fitch regarding housing affordability

    They get some things usual, I think far more focus needs to be paid to zoning....