For rent and utilities to be considered affordable, they are supposed to take up no more than 30 percent of a household’s income. But that goal is increasingly unattainable for middle-income families as a tightening market pushes up rents ever faster, outrunning modest rises in pay.
The strain is not limited to the usual high-cost cities like New York and San Francisco. An analysis for The New York Times by Zillow, the real estate website, found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income.
In Chicago, rent as a percentage of income has risen to 31 percent, from a historical average of 21 percent. In New Orleans, it has more than doubled, to 35 percent from 14 percent. Zillow calculated the historical average using data from 1985 to 2000.
Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000.
That is from Shaila Dewan. And Ryan Avent adds comment.
A house listed for just under $600,000 in East Vancouver sold for $643,000 after its first weekend on the market.
According to the Huffington Post B.C., Vancouver’s cheapest listed single family home attracted large numbers to open houses, with two written offers pushing the final purchase price seven per cent over asking.
The price of the 100-year-old, 1,951-square-foot, three-bedroom, detached house at 2622 Clark Dr. was set low initially due to its smaller size and half lot site.
“It’s very rare, and that’s why all the excitement,” said RE/MAX realtor Mary Cleaver.
There is more here, and I thank Michelle Dawson for the pointer.
From a report from today’s WaPo:
No examples have surfaced of anyone actually exploiting the vulnerability.
Of course that is no longer true, as The Royal Canadian Mounted Police are investigating the cases of 900 Canadian identity theft victims. And there are likely undetected further cases. Still, when I hear this crisis described as “On the scale of 1 to 10, this is an 11,” I conclude that economists think about risk differently than do most people, including tech consultants. (To flip this coin on its other side, I am not especially reassured about the web sites judged as “safe” — should we now start trusting such judgments so strongly?)
What can the deadweight loss be of a previously unnoticed crisis? And if that is an 11, what does a 12 look like? How many Canadian victims would be needed to get us up to 13?
There is a new paper by Kelly Shue and Richard Townsend (pdf), it is quite intriguing though note it is preliminary work. I am not linking to it but the authors appear to have distributed the abstract on the internet:
We explore a rigidity-based explanation of the dramatic and off-trend growth in US executive compensation during the late 1990s and early 2000s. We show that executive option and stock grants are rigid in the number of shares granted. In addition, salary and bonus exhibit downward nominal rigidity. Rigidity implies that the value of executive pay will grow with firm equity returns, which averaged 30% annually during the Tech Boom. Rigidity also explains the increased dispersion in pay across firms, the difference in growth rates between the US and other countries, and the increased correlation between pay and firm-specific equity returns. Regulatory changes requiring the disclosure of the value of option grants help explain the moderation in executive pay in the late 2000s. Finally, we find suggestive evidence that number-rigidity in executive pay is generated by money illusion and reference-dependent motivation, the same behavioral biases that may underlie downward nominal wage rigidity among rank and file workers.
For the pointer I thank Robert J. Shiller.
Addendum: The authors recommend this link to a new version of the paper.
Le Weekend explains why the Coase theorem does not hold in the marriages of aging British whiners. The Lunchbox, in addition to having an interesting plot (imagine a lower-tech Indian “You’ve Got Mail”), is the best movie I’ve seen on the nature of Indian micro-transactions, whether in relationships or in the workplace. Erving Goffman would be proud, and the mention of Harvard is the funniest line I’ve heard in a movie in years. Under the Skin, as I understood it, asks what kind of trades might be possible between us and one of Rilke’s angels, if the latter were to come down to earth. The movie does indeed answer that question, and the underlying connection between Rilke and Islam is discussed here. And here is a fascinating article about the most memorable actor in the movie. Maybe the best piece you will read today.
I thought all three movies were excellent, and full of social science, though none is a movie that everyone will enjoy.
When I am watching a movie I often think “why isn’t the Coase theorem holding here?” There are few movies — outside of sappy romantic comedies — in which the Coase theorem explains much of the plot.
The Italian Tourist Board spends an astounding 98 percent of its budget on salaries, with basically nothing left for its actual job of tourism promotion.
The point of the article is that hardly anyone visits southern Italy any more, thus making it one of the world’s best arbitrage opportunities. It is one of my favorite regions.
By the way:
There are trains in the Mezzogiorno that travel at an average speed of 8.7 miles an hour.
Metaponto, in the Basilicata region east of Naples, has a five-track, marble-clad rail station, paid for by $25 million in European Union funds. But the last train out is an 8:21 a.m. express to Rome. If you want to go anywhere else, you have to take a bus.
In the 1970s, Italy was the world’s #1 tourist destination but now it has slipped to number five. There has never been a better time to go.
I enjoyed this book, and I recommend that you get it for your kid. Here is one bit of many:
Good help is hard to find. Really hard to find. Sure, there are lots of people with the right degrees and résumés, but the kind of employee we yearn for sticks out almost immediately.
You can buy the book here.