Is The Housing Recovery For Real?

The big headline number for housing was yesterday’s report that the Case-Shiller Index rose more rapidly on an annual basis than anytime since 2006.  Does this mean the housing market is back?  Two fundamentals suggest the answer is yes; a third suggests maybe.

House prices are certainly in line with rents right now. Jed Kolko at Trulia shows that in nearly every market, potential buyers with an expected holding period of five years or more and a combined state and local marginal tax rate of 25 percent or higher are better off financially owning than renting.

House prices are also in line with income in all but the most expensive coastal markets.  In fact, Numbeo shows that even in our coastal cities, price-to-income ratios are very reasonable by world standards.

But as weak as housing construction has been since the last quarter of 2008 (see below), over the past ten years we have started about 1.23 million houses a year while adding only about  920,000 households per year.  That means we still need to account for 300,000 houses per year for us to be at the same place we were ten years ago (which is about when housing construction really took off).

View the full article on Forbes.

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Homeowners, Name Your Price

A real-estate site tests the magic number that might convince an owner to move; listing an Arizona home on a whim

If someone offered you $1 million for your home, would you sell?

Real-estate listings company Zillow wanted to find out. In 2006, the company created a feature called "Make Me Move," which lets homeowners name their "dream price" that would compel them to move.

Here's how it works: A homeowner enters his street address to find it in the Zillow database. While the website indicates that the home isn't for sale, the owner can add details, such as the number of bedrooms, bathrooms and upgrades, along with his dream price. Via email, any potential buyer can contact the owner, whose name isn't disclosed, and make an offer.

View the full article on WSJ.

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Blending Marketing and Journalism

To build brand, companies produce slick content and their own media

The Red Bulletin is a handsome Web and print magazine that practically oozes testosterone. Recent issues have featured stories on the world’s deepest free diver, human-pyramid building in Spain and a guy who rappels into volcanoes. All of it is embellished with photography worthy of Sports Illustrated.

The printed Red Bulletin reaches 3 million readers a month, according to a spokeswoman, which almost matches Sports Illustrated’s subscriber total. Not bad for a publication that’s barely five years old.

(The Red Bulletin) - ’The Red Bulletin,’ April 2013, cover story on Questlove.

The most interesting thing about the Red Bulletin, however, may not be what it is but who publishes it. The magazine is owned and edited by Red Bull GmbH, the Austrian-based marketer of Red Bull, the ubiquitous “energy” drink. The company started the magazine to help reinforce its self-created image as a live-at-the-edge brand for the young men who guzzle its primary product.

So is the Red Bulletin marketing or journalism? The answer: both.

Dozens of companies, including Boeing, General Electric, Pepsi, American Express and Verizon Wireless, are becoming their own publishers, creating and distributing “content” — articles, videos, photos — that would be right at home in a traditional newspaper, magazine or TV program.

View the full article on Washington Post.

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Want Growth? Getting More Flights Might Help

Some years ago, I did some work on whether air traffic could predict population growth and job growth.  The process of doing so is not as straightforward as it sounds, because something might simultaneously explain both air-traffic and growth, and so it is necessary to go through a complicated econometric procedure to purge any correlation of air traffic and growth of variables that might explain both.  In the end, I found that air traffic matters a lot to population growth and job growth.  I also think Jan Brueckner found similar results in his paper on the subject, as do Blonigen and Christea in their paper.

It is time to redo the exercise using newer data.  I start with a scatterplot of boardings per capita in 2000 against population growth between 2000 and 2010 for the 50 largest Metropolitan areas.

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Is Government The Problem?

Government. We seem to be having an extended debate over the question: Is government the problem? This isn’t the right question, in my view. Rather, the right questions are: Can government be a problem? And, if so, when and what can be done about it?

The answer to the first question, whether government is the problem, is “sometimes.”  We all must realize that government has done amazing things. The interstate highway system, California’s aqueducts and UC higher education system, the Panama and Suez Canals, national parks, the Internet, a sustained rural power grid, many small city main streets – these accomplishments and others have helped improve quality of life and economic productivity. They would never have happened without the vision, energy, and resources of government. So government can clearly be the solution.

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