Tuesday, January 01, 2008

Morris Davis, Andreas Lehnert, and Robert F. Martin Get Us Closer to the True Rent-to-Price Ratio for Housing

Their paper is here:

http://morris.marginalq.com/DLM_fullpaper.pdf

This is a careful analysis, and implies that house prices need to fall a lot for the real PE ratio to return to historical norms (the long run norm seems to be about 5 percent, and we are currently around 3.5 percent--turned around, the PE ratio has risen from about 20 to a little under 30).

A couple of issues worth considering, though. First, land use regulation is surely more binding now than it was 20 years ago, meaning higher expected long-term growth rates in prices may not be unreasonable. Using their benchmark analysis, expectations about growth need to be 1.5-2 percent higher now than they were in the past in order to get equilibrium. This is certainly possible, if not likely.

Second, owner occupied housing has improved in a variety of characteristics not measured in the decennial census. Most important, AHS data show owner-occupied housing is getting relatively larger in terms of square footage. The data reported in the census (number of rooms) is not as reliable an indicator of quality as living area. Vintage will to some degree pick this up, but the omission of living area from the census creates an important problem. One could say the same thing about building materials and finishes.

That said, the paper is well worth reading--and should leave us a little more frightened than we were before.

16 comments:

Ken Houghton said...

"Most important, AHS data show owner-occupied housing is getting relatively larger in terms of square footage. The data reported in the census (number of rooms) is not as reliable an indicator of quality as living area."

Clearly true, but not necessarily relevant if you assume (no reason not to) that there is a declining marginal value to sqftage per capita, which will especially be true if the size of the plot is constant.

Anonymous said...

You received a mention in the wall street journal blogs today for your comments on this study:

http://blogs.wsj.com/economics/2008/01/02/houses-rents-and-bubbles/?mod=homeblogmod_economicsblog

Anonymous said...

Why would land use regulations increase the price of owned homes but not rented ones?

Anonymous said...

"Why would land use regulations increase the price of owned homes but not rented ones?" Yeah, that's what I'm wondering, too. And also to Richard's point about the quality (i.e., sq ft) of owner-occupied housing being on the increase, I would assume (absent data to the contrary) that the owner/renter proportion of new construction is the same as the proportion of old construction.

must love my kids! said...
This comment has been removed by the author.
must love my kids! said...
This comment has been removed by the author.
Anonymous said...

Richard: I did a back of the envelope P/E ratio study for the Washington DC area and it was posted on Bubble Meter Blog by David. Here is a link:
http://bubblemeter.blogspot.com/2006/02/real-estate-pe-ratio-for-washington-dc.html

I would love to hear your thoughts about it. I guess it is time to update it and see what is happening now!

Eric in DC

Omar Cruz said...

I like this blog is fantastic, is really good written. Congratulation. Do you want to see something more? Read it...:Great investment opportunity in Costa Rica: beach real estate, condo, condos for sale. Visit us for more info at: http://www.costa-ricarealestate.com

Picky Boot said...

This blog was really good I liked it a lot. The link brought out all details regarding Rent-to-Price ratio for housing, which I was eager to know.

Anonymous said...

^^Thanks!!

婚前徵信婚姻感情大陸抓姦外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回大陸抓姦離婚工商徵信婚前徵信外遇抓姦感情挽回尋人大陸抓姦離婚家暴工商徵信法律諮詢跟蹤工商徵信婚前徵信感情挽回外遇抓姦法律諮詢家暴尋人大陸抓姦離婚大陸抓姦外遇尋人家暴工商徵信法律諮詢家暴感情挽回大陸抓姦外遇婚前徵信離婚尋人工商徵信外遇抓姦法律諮詢家暴婚前徵信大陸抓姦尋人感情挽回外遇抓姦婚前徵信感情挽回尋人大陸抓姦工商徵信法律諮詢離婚家暴工商徵信外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回大陸抓姦離婚婚前徵信工商徵信外遇抓姦尋人離婚家暴大陸抓姦感情挽回法律諮詢離婚感情挽回婚前徵信外遇抓姦家暴尋人工商徵信外遇抓姦法律諮詢家暴婚前徵信尋人感情挽回">徵大陸抓姦離婚婚前徵信工商徵信外遇抓姦尋人離婚家暴大陸抓姦感情挽回法律諮詢

租車公司 said...

租車公司,行易花蓮租車旅遊網,花蓮,租車,花蓮,花蓮旅遊景點,花蓮,一日遊,一日遊,溯溪,賞鯨,泛舟,花莲租车,租车,花莲,花莲旅游,花莲租车,租车,花莲,花莲旅游,租车,花莲,花莲旅游,租车,花莲租车,花莲,花莲旅游,花蓮,花東,租車,花蓮,花蓮,旅遊,花東,租車,花蓮,花蓮,租車,花東,花蓮,旅遊,花東,租車,花蓮,旅遊租車,花蓮旅遊,花蓮租車,花東旅遊,花蓮租車,花蓮租車,花蓮旅遊,租車,花蓮旅行社,花蓮旅遊景點,花蓮旅遊行程,花蓮旅遊地圖,花蓮一日遊,花蓮租車,花蓮租車旅遊網,花蓮租車,花蓮租車,花蓮租車,花東旅遊景點,租車,花蓮旅遊,花東旅遊行程,花東旅遊地圖,花蓮租車公司,花蓮租車,花蓮旅遊租車,花蓮租車,花蓮旅遊,花蓮賞鯨,花蓮旅遊,花蓮旅遊,租車,花蓮租車,花蓮租車 ,花蓮 租車,花蓮,花蓮旅遊網,花蓮租車網,花蓮,租車,花東 旅遊,花蓮 租車,花蓮,旅遊,租車公司,花蓮,花蓮旅遊,花東旅遊,花蓮地圖,包車,花蓮,旅遊租車,花蓮 租車,租車,花蓮租車資訊網,花蓮旅遊,租車,花東,花東地圖,租車公司,租車網,花蓮租車旅遊,租車,花蓮,賞鯨,花蓮旅遊租車,花東旅遊,租車網,花蓮海洋公園,租車 ,花蓮 租車,花蓮,花蓮旅遊,花蓮租車公司,租車花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮租車網,花蓮旅遊,花蓮租車,花蓮旅行社,花東旅遊,花蓮包車,租車,花蓮旅遊,花蓮租車,花蓮一日遊,租車服務,花蓮租車公司,花蓮包車,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮租車網,花蓮旅遊,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮租車,租車網,花蓮租車公司,花蓮旅遊,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮租車公司,花蓮一日遊,租車,租車服務,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮旅遊,花蓮賞鯨,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮租車網,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,租車花蓮,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,租車花蓮,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮包車,花蓮租車網,租車公司,花蓮租車,花蓮租車公司,花蓮一日遊,花蓮旅遊,花蓮旅遊租車,花蓮租車網,花蓮租車,花蓮一日遊,租車花蓮,花蓮租車,花蓮旅遊租車,花蓮租車,花蓮租車旅遊,花蓮租車,花蓮旅遊,花蓮旅遊,花蓮包車,花蓮溯溪,花蓮泛舟,花蓮溯溪,花蓮旅遊,花蓮旅遊,花蓮租車,租車公司,花蓮旅遊租車,花蓮租車,租車,花蓮旅遊,花蓮租車,花東旅遊,花蓮賞鯨,花蓮旅遊,花蓮泛舟,花蓮賞鯨,花蓮溯溪,花蓮泛舟,花蓮泛舟,花蓮溯溪,花蓮旅遊,花蓮旅遊,花蓮租車,花東旅遊,花蓮,花東,花蓮旅遊,花東旅遊,花蓮租車,花蓮,花東,花蓮旅遊,花蓮租車,花東旅遊,花蓮旅遊,花蓮租車,租車,花蓮旅遊,花蓮租車,花蓮旅遊租車,花蓮旅遊,花蓮租車,花蓮,花東旅遊萬事通,花蓮旅遊,租車,花蓮旅遊,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車,花蓮租車,花蓮旅遊,花蓮租車,花蓮旅遊,花蓮租車,花蓮旅遊,花蓮租車,花蓮旅遊,花蓮租車,花蓮租車,花蓮包車,花蓮旅遊,花蓮租車,花蓮太魯閣,花蓮包車,花東旅遊,花蓮旅遊行程,花蓮旅遊,花蓮 租車,花蓮租車,花蓮租車旅遊,花蓮旅遊租車,租車,花蓮旅遊推薦,花蓮旅遊包車,花蓮租車,花蓮,花蓮租車,花蓮地圖,花蓮旅遊,花蓮旅遊資訊網,花蓮旅遊景點,賞鯨,花蓮旅遊行程,花蓮旅遊,花蓮旅遊租車,花東旅遊景點,花東旅遊行程,花蓮旅遊,花蓮租車,租車,花東旅遊,花蓮旅遊,花蓮租車,花蓮,旅遊達人,旅遊達人blog,花蓮租車旅遊資訊網,花蓮,租車,花蓮,花東旅遊,地圖,租車,賞鯨泛舟溯溪,租車,[ 芝麻店家 ] 花蓮租車旅遊資訊網,花蓮租車-花蓮旅遊租車資訊網 ,旅遊網,旅遊景點,花蓮行程,花蓮,花東,旅遊租車,旅遊,花蓮,租車,花東旅遊,花蓮租車旅遊,行易旅遊民宿資訊網,花蓮,旅遊,花蓮,一日遊,花蓮好玩的地方,花蓮,,一日遊,花東,租車,旅遊,花蓮旅遊,花東旅遊,花蓮租車,花蓮租車,花蓮旅遊-花東旅遊萬事通

bing said...

http://www.chihairstraightener.us/ : chi hair straightener
http://www.chiflatiron.us/ : chi flat iron

http://www.polool.com/ : new polo shirts


http://www.pursecart.com/ : cheap handbags
http://www.pursecart.com/ : cheap bags
http://www.pumachaussures.com/ : puma chaussures
http://www.pumachaussures.com/ : chaussures puma
http://www.pumachaussure.com/ : chaussure puma

http://www.jacketsworld.com/ : Men's North Face
http://www.jacketscart.com/ : Women's North Face


http://www.myhairstraighteners.co.uk/ : hair straighteners
http://www.sexylingeriestore.us/ : sexy lingerie store
http://www.uggsoutlet.us/ : cheap ugg boots
http://www.12hot.com/ : tattoo wholesale
http://www.polooo.net/ : men's clothing
http://www.acrazystore.com/ : women's clothing




http://www.thehairstraighteners.com/ : cheap hair straighteners
http://www.polosales.com/ : cheap Lacoste polo shirts
http://www.superpolos.com/ : cheap Lacoste polo shirts
http://www.shoesbuying.com/ : 2009 nike shoes
http://www.shoesbuying.com/2009-nike-shoes-c-153.htm : new nike shoes
http://www.shoesbuying.com/air-max-classic-bw-c-185.htm : Women's max
http://www.shoesbuying.com/mens-max-93-c-188.htm : Men's max 93
http://www.shoesbuying.com/nike-shox-c-165.htm : nike shox
http://www.shoesbuying.com/nike-force-c-174.htm : Nike air force
http://www.shoesbuying.com/nike-2003-c-181.htm : Nike air max 2003
http://www.shoesbuying.com/nike-air-max-ltd-c-166.htm : nike air max ltd
http://www.shoesbuying.com/nike-air-max-tn-c-167.htm : nike air max tn
http://www.shoesbuying.com/nike-rift-shoes-c-162.htm : Nike air rift
http://www.shoesbuying.com/nike-yeezy-c-184.htm : Nike air Yeezy
http://www.shoesbuying.com/nike-airmax-c-154.htm : nike airmax
http://www.shoesbuying.com/nike-airmax-c-155.htm : Nike air max 90
http://www.shoesbuying.com/nike-airmax-c-157.htm : Nike air max 97
http://www.shoesbuying.com/nike-birds-nest-shoes-c-152.htm : nike birds nest shoes
http://www.shoesbuying.com/nike-dunk-high-c-177.htm : nike dunk
http://www.shoesbuying.com/nike-shoes-c-168.htm : nike RT1 shoes
http://www.shoesbuying.com/nike-sb-c-180.htm : nike SB
http://www.shoesbuying.com/nike-shox-shoes-c-156.htm : nike shox shoes
http://www.shoesbuying.com/nike-shox-shoes-c-158.htm : Nike shox OZ shoes
http://www.shoesbuying.com/nike-shox-shoes-c-159.htm : Nike shox R2 shoes
http://www.shoesbuying.com/nike-shox-shoes-c-160.htm : Nike shox R3 shoes
http://www.shoesbuying.com/nike-shox-shoes-c-163.htm : Nike shox R4 shoes
http://www.shoesbuying.com/nike-shox-shoes-c-164.htm : Nike shox R5 shoes
http://www.shoesbuying.com/nike-shox-c-171.htm : Nike shox TL3
http://www.shoesbuying.com/nike-trainers-lovers-c-118.htm : nike trainers lovers

http://www.racketsoffer.com/ : tennis rackets
http://www.racketsoffer.com/wilson-racquets-c-19/ : Wilson tennis rackets
http://www.racketsoffer.com/head-racquets-c-18/ : HEAD tennis rackets
http://www.racketsoffer.com/babolat-racquets-c-17/ : Babolat tennis rackets

cheap nike shoes said...

Truely a nice blog and thanks for your great work. By the way, welcome to our websites: nike sports shoes and ghd hair straightners. Every men like sport, then, it is quite important to have a pair of right cheap sports shoes to make you fully enjoy the sports. We provide puma cat , cheap nike shox, cheap nike max, shox shoesshoes, nike shox r4 shoes, shox shoes, ferrari shoesrunning shoes which are brand new and in perfect condition but on discount. All of the shoes, including the popularnike tn dollarpuma running shoes, cheap nike shoes,which is the representative shoes of nike mens shoesshoes are authentic and original of top quality. For people like running and playing basketball and other field sports, nothing would be more suitable than the cheap adidas shoes and nike shox nz basketball shoes. In addition to the shoes mentioned above, you may also be interested in the cheap adidas shoes , puma shoes and, nike running shoesWholesale and retail are both acceptable to us. Welcome to our site and free to look! Thank you and wish you a nice day. Good Luck!
Everybody like beauty, which is quite commen, especailly womens. Welcom to our store which is focused on sellingghd hair straighteners mk4and hair straightners. For women, especially the young girls, this ghd iv styler hair straightener is the best choice. ghd hair straightnersis famouse for the pretty outlook and the top quality. The price of this cheap ghd hair straightenersis acceptable and rational. Ed Hardy Jeans, Ed Hardy Hoodies ed hardy shirts ed hardy clothes ed hardy clothing
ed hardy trousers

lady said...

I like the side of the article, and very like your blog, to write well and hope to continue their efforts, we can see more of your articles. ed hardy clothes. After reading this article has strong feelings, the future will be ed hardy womens longsleeve.ed hardy longsleeve
ed hardy hoodies
ed hardy jeans
ed hardy
ed hardy clothing
ed hardy t-shirts
cheap ed hardy clothing
ed-hardy.co.uk
ed hardy shirts
wholesale ed hardy clothing
ed hardy outerwear
ed hardy mens outerwear
ed hardy womens outerwear
ed hardy clothes
ed hardy boots
ed hardy outerwear
ed hardy hoodies
ed hardy Jeans
ed hardy hoodies
ed hardy jackets
ed hardy womens jackets
ed hardy mens jackets
ed hardy bags
ed hardy trousers
ed hardy shoes
ed hardy longsleeve
ed hardy mens longsleeve
ed hardy womens longsleeve
ed hardy jackets
ed hardy suits
ed hardy clothing
ed hardy shoes
ed hardy jeans
ed hardy boots
ed hardy mens sweater
ed hardy womens cotton
ed hardy womens boots
ed hardy
ed hardy womens clothing

qingchengzhilian said...

Your blog is wonderful, I like it very much, thank you!
By the way, do you like polo shirts, which are very chic, especially the polo t shirts, I love them very much. I also like playing tennis rackets, it can keep healthy, what do you like to do?
polo t shirts women
polo t shirts on sale
polo t shirts for women
polo shirts on sale
polo shirts men
men's polo shirt
men polo shirt
mens polo shirts
mens polo shirt
cheap polo shirts
discount polo shirts
men's polo shirts
women's polo shirts
cheap tennis racket
discount tennis racket
prince tennis racquet
head tennis rackets
wilson tennis racket
babolat tennis racquet

gaohui said...

You will not have ed hardy clothes to worry about any Christian audigier discomfort, and best of all; most are ed hardy shoes designed to fit your body as the ed hardy outlet little bundle of joy grows allowing ed hardy Bikini you to wear the maternity clothing more than ed hardy hats once.The development of holiday maternity ed hardy swimsuits clothing has coincided with the changing attitudes of ed hardy clothing women regarding their bodies. Today's ed hardy glasses holiday maternity fashions are ed hardy trendy, stylish and sexy, fitting today's ed hardy iphone cases fast-paced lifestyle Now, women ed hardy dresses are proud to show off their baby bump while wearing ed hardy Jackets striking and classy maternity clothing.