A Real Housing Economist Speaks

US Treasury Secy Henry Morgenthau Jr and British economist

BRETTON WOODS, UNITED STATES - JULY 01: (L-R) US Treasury Secretary Henry Morgenthau Jr. and British economist John Maynard Keynes conferring during international monetary conference to plan for postwar reconstruction. (Photo by Alfred

The LIFE Picture Collection via Getty Images

When I think of my writing about housing economics, I sometimes think about one of the earliest memes in my memory: “I’m not an economist but I play one on the Internet.” Guilty. But I am a real economics nerd. I traveled to Bretton Woods to find the plaque that said, “John Maynard Keynes slept here.” It exists, sort of. Recently, while in San Francisco I visited real housing economist, Igor Popov. Popov is the Chief Economist at Apartment List and leads the team that produces the Rentanomics blog. I also talked with Pete Haviland-Eduah, Senior Communications Manager, who described that Apartment List is part of the information solution I described in my series about housing economics. 

"At Apartment List, we believe that everyone deserves a home they love,” Haviland-Eduah explained. Apartment List is an online platform that allows a prospective renter to dial in a series of variables from monthly rent to whether a unit has a dishwasher. Apartments have to participate, so not every single unit in a market is available, but many are. 

Moving isn’t fun. For tenants, it means uprooting and moving things across town or across the country. For landlords, a vacancy means cleaning costs, advertising, and screening possibly dozens of applications. Making the move can be a hassle for both sides, coming and going. A big part of making a move easier is information. Haviland-Eduah said Apartment List is about 

“Creating transparency for both renters and landlords by providing insight into what's happening across the rental market using our data and insights. When renters and landlords are equipped with the tools and resources they need to find the right home, it alleviates the pain points of renting and eases the process for everyone involved.”

Exactly. Apartment List isn’t alone. Apartment Guide, Apartments.Com, Zillow, and others collect data from buyer and seller to help make a match. We expect this in our economy. Sellers have always wanted clues about what buyers want, and buyers want to know what sellers have to offer. Information empowers people to make decisions in their own rational self-interest. 

But what is the role of the housing economist? Jobs do create demand. Local governments make prices higher when they squeeze supply with rules. Can economists help solve this? Do they report the weight on the scale and is it up to people like me to qualify housing policy as, “too skinny” or “too fat?”

Here’s a question and answer with Popov who was very succinct in answering my questions about how housing economists deal with data and politics. 

What is the role of the economist in housing and in trying to understand why housing prices rise or fall? 

In housing discussions, economists often end up playing the role of figuring out cause and effect. For example: "If we pull this lever, what will happen? Who will benefit and who will lose out? What will be the unintended consequences?" Economics can often uncover the tradeoffs associated with enacting different policies.

When we talk about housing affordability or affordable housing in the US, we always talk about the ratio of gross income to monthly rent. Is this the best standard? How much does this standard tell us about whether a housing unit is affordable or not? 

The ratio of gross income to monthly rent is a fairly arbitrary but often useful standard for measuring market-level changes in affordability. It's far from a perfect measure. A household may be struggling, but have a low share of household income spent on rent. For example, if a lack of affordable housing options causes three families to move in together, they pool their income to afford the rental but potentially suffer from overcrowding. On the other hand, one may have a high share of income spent on rent but not struggle with affordability at all. This might be a high earner renting a luxury unit who has plenty left over for other expenses.

Do you think there is a better standard or measurement? Are there ideas out there that intrigue you (e.g. a residual income standard). 

The residual income approach is certainly appealing, and this is a great summary. That said, the simplicity of the thirty-percent standard is what has given it staying power.

What do you think of people or agencies using cost burden (the amount above 30 percent paid for rent) as the basis to build more housing units? Some have counted "cost burdened" households and said that is how many units are needed. 

At the market-level, the cost burden metric is useful to track changes over time and across geographies or demographics. That said, there are many reasons why a household who is not cost-burdened may be struggling with finding affordable housing options and vice-versa

We talked about average prices and you talked about average price being a signal. Doesn't average price across a market confuse the issue? What about the "skew of the new," and the assumption that when new housing gets built, prices still go up. 

The average or median rent is a useful metric for understanding trends over time, but it's important to also understand housing costs along the entire distribution. Over the past ten years, housing costs have grown most quickly for those in the bottom ten percent of the income distribution. For the rich, on the other hand, housing costs have actually fallen.

Lastly, you and I agreed that many housing policies are being created to address "non-housing goals."

Where one lives touches many aspects of one's life, from education to social networks to intergenerational mobility. As a result, policy makers often use housing policy to solve non-housing issues. In these cases, it's especially important to consider carefully the full consequences of the policy and potential unintended effects. 


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When I think of my writing about housing economics, I sometimes think about one of the earliest memes in my memory: “I’m not an economist but I play one on the Internet.” Guilty. But I am a real economics nerd. I traveled to Bretton Woods to find the plaque that said, “John Maynard Keynes slept here.” It exists, sort of. Recently, while in San Francisco I visited real housing economist, Igor Popov. Popov is the Chief Economist at Apartment List and leads the team that produces the Rentanomics blog. I also talked with Pete Haviland-Eduah, Senior Communications Manager, who described that Apartment List is part of the information solution I described in my series about housing economics. 

"At Apartment List, we believe that everyone deserves a home they love,” Haviland-Eduah explained. Apartment List is an online platform that allows a prospective renter to dial in a series of variables from monthly rent to whether a unit has a dishwasher. Apartments have to participate, so not every single unit in a market is available, but many are. 

Moving isn’t fun. For tenants, it means uprooting and moving things across town or across the country. For landlords, a vacancy means cleaning costs, advertising, and screening possibly dozens of applications. Making the move can be a hassle for both sides, coming and going. A big part of making a move easier is information. Haviland-Eduah said Apartment List is about 

“Creating transparency for both renters and landlords by providing insight into what's happening across the rental market using our data and insights. When renters and landlords are equipped with the tools and resources they need to find the right home, it alleviates the pain points of renting and eases the process for everyone involved.”

Exactly. Apartment List isn’t alone. Apartment Guide, Apartments.Com, Zillow, and others collect data from buyer and seller to help make a match. We expect this in our economy. Sellers have always wanted clues about what buyers want, and buyers want to know what sellers have to offer. Information empowers people to make decisions in their own rational self-interest. 

But what is the role of the housing economist? Jobs do create demand. Local governments make prices higher when they squeeze supply with rules. Can economists help solve this? Do they report the weight on the scale and is it up to people like me to qualify housing policy as, “too skinny” or “too fat?”

Here’s a question and answer with Popov who was very succinct in answering my questions about how housing economists deal with data and politics. 

What is the role of the economist in housing and in trying to understand why housing prices rise or fall? 

In housing discussions, economists often end up playing the role of figuring out cause and effect. For example: "If we pull this lever, what will happen? Who will benefit and who will lose out? What will be the unintended consequences?" Economics can often uncover the tradeoffs associated with enacting different policies.

When we talk about housing affordability or affordable housing in the US, we always talk about the ratio of gross income to monthly rent. Is this the best standard? How much does this standard tell us about whether a housing unit is affordable or not? 

The ratio of gross income to monthly rent is a fairly arbitrary but often useful standard for measuring market-level changes in affordability. It's far from a perfect measure. A household may be struggling, but have a low share of household income spent on rent. For example, if a lack of affordable housing options causes three families to move in together, they pool their income to afford the rental but potentially suffer from overcrowding. On the other hand, one may have a high share of income spent on rent but not struggle with affordability at all. This might be a high earner renting a luxury unit who has plenty left over for other expenses.

Do you think there is a better standard or measurement? Are there ideas out there that intrigue you (e.g. a residual income standard). 

The residual income approach is certainly appealing, and this is a great summary. That said, the simplicity of the thirty-percent standard is what has given it staying power.

What do you think of people or agencies using cost burden (the amount above 30 percent paid for rent) as the basis to build more housing units? Some have counted "cost burdened" households and said that is how many units are needed. 

At the market-level, the cost burden metric is useful to track changes over time and across geographies or demographics. That said, there are many reasons why a household who is not cost-burdened may be struggling with finding affordable housing options and vice-versa

We talked about average prices and you talked about average price being a signal. Doesn't average price across a market confuse the issue? What about the "skew of the new," and the assumption that when new housing gets built, prices still go up. 

The average or median rent is a useful metric for understanding trends over time, but it's important to also understand housing costs along the entire distribution. Over the past ten years, housing costs have grown most quickly for those in the bottom ten percent of the income distribution. For the rich, on the other hand, housing costs have actually fallen.

Lastly, you and I agreed that many housing policies are being created to address "non-housing goals."

Where one lives touches many aspects of one's life, from education to social networks to intergenerational mobility. As a result, policy makers often use housing policy to solve non-housing issues. In these cases, it's especially important to consider carefully the full consequences of the policy and potential unintended effects. 


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For the past twenty-five years, I have been involved in public policy in the areas of education, health, and housing. Most recently I was housing director at a large re

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