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Liberalizing Cities From The Ground Up
Kevin Erdmann argues that mortgage credit standards are too tight. Others say the federal government is subsidizing homeownership. Can they both be right?
1. A report on (Western) European parking policies. Abstract of the abstract: Big on charging market rates for on-street parking, but also big on capping private developer’s ability to build parking. I’d be interested to see an analysis like this done to see if the caps are actually set lower than the market equilibrium. Streetsblog also has a good summary. 2. It’s unfortunate that this developer chose to express himself in such an unsympathetic way (someone should teach him the meaning of the word “corruption,” in particular), but his analysis of NYC’s recent property tax assessment hikes is consistent with what we’ve seen before: people who live in apartments are taxed at higher rates than people who live in single-family homes. 3. Urbanists are trying to change Fannie Mae, Freddie Mac, and HUD’s policies of not funding small mixed use projects. From what I understand, the GSEs’ role in financing American mortgages has actually increased in the wake of the financial crisis, so the federal bias against mixed use may actually be stronger than it was before the recession. 4. Washington, DC may speed through zoning changes that require parking to not be out front. I’m not sure, but I think that DC currently has some laws mandating that it be out front, which means this would be yet another example of zoning codes going from density-forbidding to density-forcing without any intermediate stop. 5. Remember yesterday when I said that Gallaudet was a bigger drag on its neighborhood than the industrial-looking blight nearby? DC lawmakers may try to one-up Gallaudet by replacing the buildings with a soccer stadium.
I’d like to believe that, at least for another ten years or so, no amount of government money will be able to override investors’ memories of the most recent housing bubble. But we may soon find out what lessons we really learned: While everyone has been watching Fannie and Freddie, the administration has quietly shifted most federal high-risk mortgage initiatives to FHA, the government’s original subprime lender. Along with two other federal agencies, FHA now accounts for about 60 percent of all U.S. home purchase mortgage originations. This amounts to more than $1 trillion and is rising rapidly. The administration justifies this policy by saying it is necessary to support the mortgage market, yet borrowers are once again receiving high-risk loans. […] The Dodd-Frank Act [the recent financial reform], however, exempts FHA and other government agencies from appropriate standards on mortgage quality. This will give low-quality mortgages a direct route into the market once again; it will be like putting Fannie and Freddie back in the same business, but with an explicit government guarantee. For example, thanks to expanded government lending, 60 percent of home purchase loans now have down payments of less than 5 percent, compared to 40 percent at the height of the bubble, and the FHA projects that it will increase its insured loans total to $1.34 trillion by 2013. Indeed, the FHA just announced its intention to push almost half of its home purchase volume into subprime territory by 2014-2017, essentially a guarantee to put taxpayers at risk again. The subprime bubble was years in the making by the time it popped, so if this FHA lending doesn’t continue for much longer and/or doesn’t accelerate, it might not be a problem. But it does make me worry that the political incentives haven’t changed since the ’90s […]
This is probably my favorite link list yet…enjoy! 1. The WSJ claims that delinquent homeowners can expect to stay in their homes after making their last mortgage payment – that is, they can live rent-free – for at least 16 months. The longer it takes for foreclosures to happen, the longer it will take for real estate markets to adjust to the new paradigm. 2. Fascinating article about food trucks in Houston. In it I found a second example of bad anti-terrorism policy trumping good urbanism: Chimed in Joyce: “We all know that Houston is not a walking city, as much as we wish it was. But there are two areas that are walkable – downtown and the Medical Center. The use of propane trucks is prohibited downtown, however. The regulation was originally put in place as a part of Homeland Security after 9/11, but the Houston Fire Department continues to enforce it. That’s an example of something we’re looking to work with, to allow food trucks to operate in these higher foot traffic areas.” The article also confirms my suspicion that food trucks may actually be safer than restaurants: “These are essentially open kitchens…you can look in there and see exactly what these guys are doing, where they’re grabbing the food from, how they’re cooking it.” 3. Hong Kong and Singapore are both instituting controls on their residential property markets to avoid bubbles, but they are also freeing government land for developers (in spite of Singapore’s free market reputation, most residents apparently live in public housing). Some speculate that Hong Kong’s controls might be a sign of increasing control from Beijing. Reuters says that “China, Singapore, Taiwan, Thailand and Malaysia have also unveiled more stringent regulations in recent months” – the bubble that led to the 1997 financial crisis […]
Shiller on Housing and Bubbles Robert Shiller of Yale University talks with EconTalk host Russ Roberts about the current housing mess and related financial market problems. Shiller argues that the decade-long run up in housing prices was a bubble where speculative fervor outweighed any economic fundamentals. He also discusses the genesis of the Case-Shiller housing price index and his idea for how it might be used to reduce risk in the mortgage market. Note: This podcast was recorded on September 5, 2008, days before Secretary of the Treasury Paulson put Fannie Mae and Freddie Mac into conservatorship.
