A movie about an economics professor, music and immigration policy. It is a powerful and poignant indictment of how America's government treats those whose only "crime" is a desire to live here.
It is bad enough that where we happen to be born has so much to do with how life turns out for us. It is worse when something as artificial as national frontiers prevent those born into bad circumstances from improving their lots in life.
Sunday, June 29, 2008
Perhaps some hope on California's Housing Market
According to the California Association of Realtors, existing home sales in May were up 18 percent from a year earlier. At the same time, my colleague Delores Conway is showing that the gap between house payments and rents is returning to its historical norm for Los Angeles.
But perhaps more interesting are anecdotes I heard at the Pacific Coast Builders Conference in San Francisco last week--buyers are going on REO "bus tours" and purchasing multiple homes--with their own money. It is not all all clear how widespread this phenomenon is, but if we see large numbers of vultures in a market using equity to sweep up REO properties and short sales, we have seen the bottom of the market.
But perhaps more interesting are anecdotes I heard at the Pacific Coast Builders Conference in San Francisco last week--buyers are going on REO "bus tours" and purchasing multiple homes--with their own money. It is not all all clear how widespread this phenomenon is, but if we see large numbers of vultures in a market using equity to sweep up REO properties and short sales, we have seen the bottom of the market.
Tuesday, June 24, 2008
Superior Classical Music Blogging
So I am listening to Perahia's Goldbergs, and I run across this: http://jessicamusic.blogspot.com/. Jessica is clearly witty and informed. I'll enjoy reading through the archives.
Was the "Northwest" in North by Northwest the first example of product placement?
One commenter thinks it is perhaps so. You see the red tail when Carey Grant and Leo G. Carroll are headed for a plane from Midway to Rapid City. I don't know whether the coincidence of the airline name (actually Northwest Orient at the time) and the movie title was intentional or not.
I did forget to list NW among airlines. It is funny, because I think after United I have flown on it more than any other. There must have been a traumatic experience that made me want to forget....
I did forget to list NW among airlines. It is funny, because I think after United I have flown on it more than any other. There must have been a traumatic experience that made me want to forget....
Monday, June 23, 2008
More on airlines
I didn't mean to pick on United in my last post, it just happened to be the airline that the woman worked for. I hear people complain a lot about United, but as I have said before, I don't think they are too bad. They give frequent fliers extra room (an excellent loyalty program benefit), and you can hear the pilots communicate with ATC. I find this calming. The ground staff and flight attendants are generally very nice.
So here is my list, best to worst, of domestic airlines I have flown:
Jetblue
Midwest Express
The Old TWA (RIP)
United
Delta
Continental
Southwest
American
US Airways
The bottom two tie for worst--I try to avoid them.
Among international carriers, my list is
Singapore (in my egalitarian dream, everyone gets to fly it at least once)
Lufthansa
Cathay Pacific
KAL
ANA
Emirates
KLM
Air France
Thai
Air Canada
Alitalia
Air India
The Ukrainian National Airline--soviet era plane smelled of oil
So here is my list, best to worst, of domestic airlines I have flown:
Jetblue
Midwest Express
The Old TWA (RIP)
United
Delta
Continental
Southwest
American
US Airways
The bottom two tie for worst--I try to avoid them.
Among international carriers, my list is
Singapore (in my egalitarian dream, everyone gets to fly it at least once)
Lufthansa
Cathay Pacific
KAL
ANA
Emirates
KLM
Air France
Thai
Air Canada
Alitalia
Air India
The Ukrainian National Airline--soviet era plane smelled of oil
Framing
When I was in Philadelphia last week, I met a woman who had worked in the HR department at United Airlines. As one might expect, the employees at United are not a happy group, but they also don't want to leave. I asked the woman why, pointing out that people such as flight attendants are quite intelligent, and could presumably make more money doing something they might like better.
She said the issue is that the flight attendants love the travel benefit (talk about your busman's holiday!). I asked the HR woman whether the travel benefit compensated for the pay lost not working in other areas. She said no--that many workers could make tens of thousands more, which would, of course, suffice to pay for a large number of plane tickets. But beyond this, people could use the money to buy things other than plane tickets, were they to chose.
This seems like a classic example of framing. Flight attendants see their travel benefit as an entitlement, and they would have to be paid something more than the value of the entitlement to let it go. Economics needs to get better at figuring this stuff out.
She said the issue is that the flight attendants love the travel benefit (talk about your busman's holiday!). I asked the HR woman whether the travel benefit compensated for the pay lost not working in other areas. She said no--that many workers could make tens of thousands more, which would, of course, suffice to pay for a large number of plane tickets. But beyond this, people could use the money to buy things other than plane tickets, were they to chose.
This seems like a classic example of framing. Flight attendants see their travel benefit as an entitlement, and they would have to be paid something more than the value of the entitlement to let it go. Economics needs to get better at figuring this stuff out.
Sunday, June 22, 2008
Stuart Thiel knows why people are unhappy (about George Bush)
Stuart (my Econometrics TA in Graduate School) has been tracking this relationship for some time. Looks pretty robust to me.
Great Piano Moments I have heard
Martha Argerich playing the Chopin F-minor with the Minnesota (I was 16 and I think I fell in love)
Duke Ellington at Interlochen. His technique was not all it once was, but who cared...
Count Basie accompanying Ella Fitzgerald at Carnegie Hall.
Maurizio Pollini playing the Wanderer Fantasy at the Kennedy Center.
Two Rudolph Serkins: Beethoven Op. 81 and Schubert B-flat at Symphony Hall in Boston, Beethoven Op 53 at the Kennedy Center.
Ivan Morevic playing the Appasionata in Jordon Hall in Boston. He just exploded into the coda.
Bobby Short at the Cafe Carlyle, and at the Kennedy Center
Mitsuko Uchida playing Mozart (in particular the C-minor Fantasy and Sonata)at Strathmore, our magnificent new hall in Montgomery County, Maryland.
Alfred Brendal playing the List Sonata at the Kennedy Center
Strangely, I have never heard my favorite piece (The Goldberg Variations, with which I have something of an obsession) in concert. I can't wait to hear the Disney Hall.
Duke Ellington at Interlochen. His technique was not all it once was, but who cared...
Count Basie accompanying Ella Fitzgerald at Carnegie Hall.
Maurizio Pollini playing the Wanderer Fantasy at the Kennedy Center.
Two Rudolph Serkins: Beethoven Op. 81 and Schubert B-flat at Symphony Hall in Boston, Beethoven Op 53 at the Kennedy Center.
Ivan Morevic playing the Appasionata in Jordon Hall in Boston. He just exploded into the coda.
Bobby Short at the Cafe Carlyle, and at the Kennedy Center
Mitsuko Uchida playing Mozart (in particular the C-minor Fantasy and Sonata)at Strathmore, our magnificent new hall in Montgomery County, Maryland.
Alfred Brendal playing the List Sonata at the Kennedy Center
Strangely, I have never heard my favorite piece (The Goldberg Variations, with which I have something of an obsession) in concert. I can't wait to hear the Disney Hall.
If we have hit peak oil, what won't I mind giving up.
I don't mind driving a small car (especially now that we don't need a minivan to cart around the kids, their friends, and their props for their various shows). I never have minded walking and using public transport. I'm willing to eat less meat so we use feed grains more disparately and efficiently. I don't mind living in a small house close to transit. I would still own a car, but just for those days when I need to get around town more than the commute in and the commute home. I would keep my heat off almost all the time in Southern California, and use AC lightly.
For me, the only hard thing to give up would be travel. Walking the streets of London, Paris, Florence, Rome, Stockholm, Amsterdam, Kiev, Krakow, Hong Kong, Tokyo, Seoul, Cairo, Dubai, Mumbai, Hyderabad, Singapore, Quito, Lima Dhaka and even TJ has taught me as much about urban and real estate dynamics as any spreadsheet or map--and I love spreadsheets and maps. If environmental conditions require us to do less of this kind of thing, I will cooperate. But I won't be happy about it.
For me, the only hard thing to give up would be travel. Walking the streets of London, Paris, Florence, Rome, Stockholm, Amsterdam, Kiev, Krakow, Hong Kong, Tokyo, Seoul, Cairo, Dubai, Mumbai, Hyderabad, Singapore, Quito, Lima Dhaka and even TJ has taught me as much about urban and real estate dynamics as any spreadsheet or map--and I love spreadsheets and maps. If environmental conditions require us to do less of this kind of thing, I will cooperate. But I won't be happy about it.
NME says the youtube Lhevine recording of La Campanella is authentic
The commentary is here.
I myself am befuddled--but this recording is quite wonderful--the phrasing during the first 40 seconds is magic, and the ability of the pianist--whoever it is--to articulate while playing quite rapidly is remarkable.
I myself am befuddled--but this recording is quite wonderful--the phrasing during the first 40 seconds is magic, and the ability of the pianist--whoever it is--to articulate while playing quite rapidly is remarkable.
Friday, June 20, 2008
Jumbo Conforming Spreads widen again
I looked at the Wells-Fargo web site this morning: the difference on APRS between jumbo and conforming 30-year fixed rate mortgages was 156 basis points.
I looked at the Citibank web site this morning: they were requiring five (five!) points to get a 30-year fixed rate mortgage; the difference in APRs was more than 200bp (and this assumes points are amortized over the full term of the loan--the real gap is actually larger).
I looked at the National City web site this morning: they are not quoting rates on jumbos.
Historically, the jumbo-conforming spread is less than 50 basis points. It is going to be very difficult for coastal markets to get unstuck so long as so much fear is gripping the market.
I looked at the Citibank web site this morning: they were requiring five (five!) points to get a 30-year fixed rate mortgage; the difference in APRs was more than 200bp (and this assumes points are amortized over the full term of the loan--the real gap is actually larger).
I looked at the National City web site this morning: they are not quoting rates on jumbos.
Historically, the jumbo-conforming spread is less than 50 basis points. It is going to be very difficult for coastal markets to get unstuck so long as so much fear is gripping the market.
Mark Thoma explains why people are unhappy
For the past four or five years, I have gone to a meeting that the CFO of DC convenes to get views on the state of the area real estate market. At the most recent of these meetings, a hack "economist" declared that people were (I am paraphrasing here) pessimistic without reason about the economy.
Neil Irwin in The Washington Post had a similar complaint, and argued that people's pessimism arose from the fact that the indicators they see on a regular basis, such as gas prices, have been alarming to them.
But I think Mark Thoma has the real answer:
I think both the "economist" at the meeting and the Washington Post reporter have limited capacity to think about what it must be like to be the median income household now. The median income household has now had (at best) many years of stagnant living conditions and worsening economic security.
Neil Irwin in The Washington Post had a similar complaint, and argued that people's pessimism arose from the fact that the indicators they see on a regular basis, such as gas prices, have been alarming to them.
But I think Mark Thoma has the real answer:
Part of the problem is the presumption in the question, which has been around for several years now and is basically "why are people so gloomy when the economy is doing so well?" If you ask instead, "why are people so gloomy when the economy has all these problems, reduced economic security, stagnant real wages, rising health care costs, falling home values, rising college costs, rising food costs, loss of employer based retirement programs, rising energy costs, worries about the future, etc., etc.," there's really no mystery.
I think both the "economist" at the meeting and the Washington Post reporter have limited capacity to think about what it must be like to be the median income household now. The median income household has now had (at best) many years of stagnant living conditions and worsening economic security.
Wednesday, June 18, 2008
La Campanella Liszt-Busoni Performed by Lhevinne
My freshman year college roommate introduced me to Lhevine's playing. I didn't much care for my freshman roommate, and when I for some unaccountable reason googled him, I saw that he gave money to Swift Boat Veterans for the Truth. But, he both motivated me to find great roommates (Curt, Harry, John and Jon) for my remaining college years; he also had great taste in pianists.
Natural Experiments in the Marginal Productivity of Labor
Tiger Woods made everyone in my family a golf fan. Before Tiger, I might watch the last round of the British Open, but that was about it (I know the Masters is the truly great tournament, but even when Tiger plays in it, it is too stuffy for me to enjoy).
My suspicion is that we are not alone. So the first difference in television ratings between last year's British Open and this year's might help establish a lower bound for Woods' marginal productivity. A robustness check will be the first difference between this year and next year. (I have tried to find how ratings points translate into advertising rates per minute, so far without success).
My suspicion is that we are not alone. So the first difference in television ratings between last year's British Open and this year's might help establish a lower bound for Woods' marginal productivity. A robustness check will be the first difference between this year and next year. (I have tried to find how ratings points translate into advertising rates per minute, so far without success).
Monday, June 16, 2008
Bumsoo Lee, Peter Gordon, James E. Moore, II, and Harry W. Richardson tell us how many trips we take, and the reasons we take them.
My soon-to-be colleagues do so here: RESIDENTIAL LOCATION, LAND USE AND TRANSPORTATION: THE NEGLECTED ROLE OF NONWORK TRAVEL.
They find that less than one out of five trips is for work, and that in 2001, the average person made more than four trips per day (reinforcing my point in my last post on gas prices and urban land).
I should also mention that according to Zillow, for the Washington area, house prices in nearby Montgomery County have fallen by 7 percent in the last years, while in exurban Prince William County they have fallen by 24 percent. Paul Carrillo and I have done preliminary estimates that show that prices in the District have not fallen at all.
As for changing urban form, it will take awhile, but it could happen. Houses in the exurbs will likely not be torn down, but they will depreciate rapidly, while houses near employment centers and amenities will increase in relative value, meaning there will be incentives for dense redevolopment. For a good treatise on "filtering," see Ed Olsen's classic AER paper.
They find that less than one out of five trips is for work, and that in 2001, the average person made more than four trips per day (reinforcing my point in my last post on gas prices and urban land).
I should also mention that according to Zillow, for the Washington area, house prices in nearby Montgomery County have fallen by 7 percent in the last years, while in exurban Prince William County they have fallen by 24 percent. Paul Carrillo and I have done preliminary estimates that show that prices in the District have not fallen at all.
As for changing urban form, it will take awhile, but it could happen. Houses in the exurbs will likely not be torn down, but they will depreciate rapidly, while houses near employment centers and amenities will increase in relative value, meaning there will be incentives for dense redevolopment. For a good treatise on "filtering," see Ed Olsen's classic AER paper.
Sunday, June 15, 2008
When Turtle talked about "Cheap money," we should have known there was a bubble
As part of my *ahem* research for living in Southern California, I started watching the first season of Entourage. In the second episode, Vince decides to buy a $10 million house after he has turned down a $4 million movie contract. Drama tells him it is OK, because it is, after all, California, where a house worth $10 million this year will be worth $20 million next year. And Turtle tells Vince "he can get money cheap."
The show's first year was 2004. Should have tipped us all off....
The show's first year was 2004. Should have tipped us all off....
A little more on Gas and Urban Land
Yesterday, I made an assumption that each household made five trips per day--this was pulled out of thin air, because I couldn't find an estimate.
I have found one here: in 2001, the average American made four trips per day. The average household has a little more than 2.5 people, meaning that the average household made ten trips per day. According to the US Census, 77 percent of these trips involve a driver without passengers; 11 percent involve carpooling. If the average car pool has two passengers (that is probably too high), then car trips per day per household is more like eight than five. From a static standpoint, I underestimated the impact of gas prices on urban form. But as one commenter noted, dynamics will tend to attenuate some of the impact (on the other hand, close in places where transit is a choice will now be at a greater advantage than places on the fringe).
People often wonder why European densities are so much higher than US densities. Part of it is history (Paris and London largely developed before automobiles); but part of it is that Europeans have been paying high prices for gasoline for a long time, and that they have had transit as an alternative. That said, the dynamics of European cities has been toward sprawl--central Paris has been losing population to its suburbs for the past fifty years. But I will leave the discussion of that to another post.
I have found one here: in 2001, the average American made four trips per day. The average household has a little more than 2.5 people, meaning that the average household made ten trips per day. According to the US Census, 77 percent of these trips involve a driver without passengers; 11 percent involve carpooling. If the average car pool has two passengers (that is probably too high), then car trips per day per household is more like eight than five. From a static standpoint, I underestimated the impact of gas prices on urban form. But as one commenter noted, dynamics will tend to attenuate some of the impact (on the other hand, close in places where transit is a choice will now be at a greater advantage than places on the fringe).
People often wonder why European densities are so much higher than US densities. Part of it is history (Paris and London largely developed before automobiles); but part of it is that Europeans have been paying high prices for gasoline for a long time, and that they have had transit as an alternative. That said, the dynamics of European cities has been toward sprawl--central Paris has been losing population to its suburbs for the past fifty years. But I will leave the discussion of that to another post.
Saturday, June 14, 2008
My Upcoming Industry Talks
June 25, Real Estate Capital Markets After the Credit Crisis, UBC Center for Urban Economics, Vancouver.
June 26, Pacific Coast Builders Conference, San Francisco
September 11, Commercial Property News Conference, New York
September 18, Multihousing World, Denver
June 26, Pacific Coast Builders Conference, San Francisco
September 11, Commercial Property News Conference, New York
September 18, Multihousing World, Denver
$4 per gallon gasoline and the urban land market
Over the past six years, the price of gasoline has risen about $2 per gallon. What does this mean for relative urban land prices?
Let's say the average household makes five one-way trips per day--for work, shopping, entertainment, etc. Let's also say that the average car gets 20 mpg in city driving. Each mile of distance to work, shopping, etc. is therefore now 50 cents per day per household more expensive than before. A household living immediately adjascent to work and shopping should then be willing to pay $5 per day more in rent than a household 10 miles away compared with six years ago, all else being equal. This becomes $150 per month, or $1800 per year. Assuming a five percent cap rate for owner occupied housing, this translates to $36,000 in relative change in value. Given that the median house price in the US is about $220k, this is kind of a big deal.
The assumptions here are pretty crude (particulalry the ceteris paribus assumption), but if gas remains at its current real price, we will see the shape of US cities change.
Let's say the average household makes five one-way trips per day--for work, shopping, entertainment, etc. Let's also say that the average car gets 20 mpg in city driving. Each mile of distance to work, shopping, etc. is therefore now 50 cents per day per household more expensive than before. A household living immediately adjascent to work and shopping should then be willing to pay $5 per day more in rent than a household 10 miles away compared with six years ago, all else being equal. This becomes $150 per month, or $1800 per year. Assuming a five percent cap rate for owner occupied housing, this translates to $36,000 in relative change in value. Given that the median house price in the US is about $220k, this is kind of a big deal.
The assumptions here are pretty crude (particulalry the ceteris paribus assumption), but if gas remains at its current real price, we will see the shape of US cities change.
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