Age, Demographics, and the Demand for Housing, Revisited (with Richard K. Green) Regional Science and Urban Economics, 61, 2016: 86–98. The United States is aging, and many baby boomers are reaching or will soon reach the retirement age of sixty-five. On the other hand, the Millennials, the largest generation in the U.S. history, has faced the problems of high rents relative to incomes and volatility in housing markets. These shifts are reigniting debates about how changes in age structure will affect housing and labor markets. To address some of these concerns, we revisit Green and Hendershott (1996) and analyze the links between the willingness to pay for a constant-quality house and demographics using the census microdata from the 1990 and 2000 Census and 2006, 2010, and 2014 American Community Survey. The results generally reconfirm what Green and Hendershott (1996) found: The massive demographic shift will not by itself result in another housing crisis. This is because the educational and income levels of current and future seniors are still relatively higher than before, leading them to consume more than previous generations. Also, the size of the Millennial generation will drive the growth of aggregate housing demand, although the growth of per household housing demand may be relatively modest.
Consumption Inequality in the Great Recession (with Gary D. Painter) Journal of Economic and Social Measurement, 41, 2016: 145–166 While the majority of inequality research focuses on income metrics to measure changes in inequality, a growing number of scholars argue that consumption is a better metric for measuring disparities in an individual’s contemporaneous well-being. This study adds to a growing literature on consumption inequality by testing how consumption inequality varies across consumption categories and changes overtime. We find that overall consumption inequality declined since the mid-2000s before a recent uptick, which can be mostly explained by decreasing gaps in transportation expenditures on vehicle purchases. At the same time, the recent decline in overall consumption inequality disguises growing inequalities in health and education expenditures (human capital investments). The rising inequality in human capital investments is of particular concern as it can predict future increases in inequality.
Cohort Momentum and Future Homeownership: The Outlook to 2050 (with Dowell Myers) Cityscape, 18, 2016: 131–143. Using a cohort-based projection of homeownership that was first presented in Myers and Lee (2014), we estimated future homeownership gains to be each cohort as it passes through successive age groups in future time periods. The overall conclusion is that massive change in the homeownership rate appears highly unlikely, unless the nation were to fall unintentionally into perpetual recession for 35 years. Slight decline in homeownership is expected, however, as the realistic and probable models produce a national homeownership rate in 2050 of 54.7% and 60.1%, respectively.
Demographic Change and Future Urban Development (with Dowell Myers) In George W. McCarthy, Gregory K. Ingram, and Samuel Moody (eds.), Land and the City, Cambridge, MA: Lincoln Institute of Land Policy, 2016: 11–58. This book chapter offers a cautious overview of demographic trends and their consequences for housing and urban development between 1990 and 2030. Especially, we discuss whether the strength and longevity of the effects of the 2008 recession, particularly on the millennial generation. Also, we outline plausible scenarios for future trends in metropolitan growth rates and generational shifts in home ownership. The findings suggest that much depends on the ability of generational cohorts, particularly the millennials, to achieve home ownership rates comparable to those of previous generations.Diverted Homeowners, the Rental Crisis, and Foregone Household Formation (with Dowell Myers, Gary D. Painter, and JungHo Park) Report for the Research Institute for Housing America of the Mortgage Bankers Association, May 2016 Much has been written already about the housing crisis that precipitated the Great Recession. Among the long-term impacts have been the emergence of a rental housing shortage and an intensified affordability crisis in the rental market. This report analyzes various supply and demand factors that have led to this crisis. In so doing, it provides detailed analysis of the shifts in homeowner and rental demand.
Bank Adaptation to Neighborhood Change: Mortgage Lending and the Community Reinvestment Act (with Raphael W. Bostic) Under review at the Journal of Policy Analysis and Management This paper examines how depository institutions responded to a mismatch between Community Reinvestment Act (CRA) regulatory rules that fix a neighborhood’s status over a decade and a neighborhood’s actual status over that decade. We find that banks approve loans more frequently in those neighborhoods that are most rapidly improving, and that this effect is stronger within CRA assessment areas than outside them. The results suggest that banks learn which neighborhoods are most rapidly improving and funnel activity to those places to reduce default risk while complying with fair lending regulation, implying that a potential unanticipated consequence of the regulation is that some underserved neighborhoods become favored relative to others.
Veblen Goods and Metropolitan Distinction: The Economic Geography of Conspicuous Consumption, A Survey of 21 Cities (with Elizabeth Currid-Halkett and Gary D. Painter) Under review at the Journal of Regional Science In this paper, we seek to understand the geographic variations of consumer behavior. Using Consumer Expenditure Survey (CEX), we analyze how consumption differs across 21 major U.S. metropolitan areas cities, and the consumer preferences of different urban denizens. We expand previous geographic analysis of consumption to include “socially visible goods” or what is known as “conspicuous consumption.” Our analysis shows that status consumption is more sensitive to an urban context. We also find consumer habits are very place-specific. Overall, our results suggest that the systematic differences in conspicuous consumption patterns across cities are positively associated with greater size and density of a metropolitan area, while constructed amenities are not consistent predictors of differences in conspicuous consumption.
"Estimates the Long-Term Effects of Hurricane Katrina," with Gary D. Painter. Article manuscript in progress, to be submitted for publication in fall/winter 2016. "Are Millennials Coming to Town? The Determinants of Location Choice of Young Adults." Article manuscript in progress, to be submitted for publication in winter 2016. "Intergenerational Transmission of Homeowner Status: Racial Disparities in Effects of Parental Wealth, Education, and Direct Assistance," with Dowell Myers, Gary D. Painter, and Julie Zissimopoulos. Article manuscript in progress, to be submitted for publication in spring 2017. "Diverted Homeowners and Rental Affordability Crisis," with Dowell Myers, Gary D. Painter, and JungHo Park. Article manuscript in progress, to be submitted for publication in spring 2017. "Did Earlier Homeownership Under the G.I. Bills Lead to Better Children's Outcomes?" Data collection and analysis in progress. "Community Reinvestment Act, Neighborhood Change, and Small Business Lending," with Raphael W. Bostic. Data collection and analysis in progress.