Book News

 Lots of book stuff happening.

Scott Sumner's "The Money Illusion" is coming out.  This is an important account of the 2008 recession.  It is the framework for viewing the economy that drew me into my housing work.

Rowman & Littlefield is releasing a paperback version of my first book "Shut Out" this month!  And here is a code you can use to get it for only $18.90.

Use code:  RLFANDF30

Here: https://rowman.com/ISBN/9781538163009/Shut-Out-How-a-Housing-Shortage-Caused-the-Great-Recession-and-Crippled-Our-Economy

And, in January,  my followup book "Building from the Ground Up: Reclaiming the American Housing Boom" will be out.

Should be an exciting few months ahead!

Getting the word out.

There have been a couple of great citations recently of my housing boom work.

As I mentioned recently, Mercatus published a paper that Scott Sumner and I had written.  Matthew Yglesias at vox.com cited it in a nice article about the need for more housing.

Also, Congress' Joint Economic Committee issued a new report on monetary policy that surprisingly pushes the envelope on new ideas. Stable Monetary Policy to Connect More Americans to Work

It was penned by Senior Economist Alan Cole.  The report cites Shut Out and supports the NGDP targeting policy that the Mercatus Center Monetary Policy group has been advocating for.

Here is Scott Sumner's reaction to it.  It's worth reading both Scott's reaction and the report itself.  It is very encouraging to see the building blocks being put in place for future improvements on these policies.

An article at Politico about letting banks help pump some cash into the pandemic scarred economy

Here is the Mercatus Center version:

https://www.mercatus.org/publications/covid-19/get-cash-more-families-need-it-now-give-banks-more-discretion-make-home-equity

Here is the Politico.com version:
https://www.politico.com/news/agenda/2020/03/21/how-mortgages-can-ease-the-downturn-140317

An excerpt:

Certainly, the 2008 financial crisis has created some reasonable fear about mortgage lending. But the dangers that were present in 2008 are not present today. There aren’t millions of recently purchased homes in cities where prices have suddenly doubled in a short period of time. Most borrowers will be long-time homeowners who braved the worst housing market in nearly a century and managed to hold on. In other words, unlike the housing bubble, these borrowers won’t be naïve new buyers speculating on a frenzied market; they will be established homeowners seeking financial safety during a pandemic. If ever there was a time to suspend the post-crisis regulatory framework, that time is now.

The current issue of the National Review focuses on housing.

I have the cover article in the current issue of the National Review.  The issue includes a few good articles on the housing affordability topic.


Here's the conclusion:

The best solution to the entire problem is greater access: freer and more-open markets, in both mortgage-funding and urban land use. 

The financial return on owning a house should come mainly from its rental value, not from excessive capital gains. That should be enough to make owning a home worthwhile. If it isn’t enough, more people will choose to rent, rents will rise, and so will the rental value of homes and the financial return on homeownership.

Today, families are not necessarily choosing to be renters. Many are renters even though it would be worthwhile to them to own their home if they could. Rents are rising just about everywhere today because we have eliminated choices. 

Solve the problem of access, and affordability will follow. Choices are the key to the goal of affordability and fairness. We need to make more of those choices legal again. 

A nice review of "Shut Out" at CATO

David Henderson, one of the frequent posters over at econlog, who I have always enjoyed following, has a very nice review of "Shut Out" at Cato.  It begins:

In his recent book Shut Out, Kevin Erdmann, a finance expert and visiting fellow at the Mercatus Center at George Mason University, has two main messages. The first, which is not controversial among economists, is that restrictions on residential construction in coastal California and the urban Northeast have constrained supply so much that housing in those areas is virtually unaffordable for people in the lower- and middle-income classes. His other message is more controversial: the financial crisis last decade was not due to a housing bubble but, rather, to bad policy decisions based on the idea that there had been a bubble. Whereas I was already convinced of his first point, I, like the majority of economists, was skeptical of his second. But because of all the data and reasoning he brings to the issue, I now find myself at least 90% convinced.

Please click on the link (pdf) for the rest.

I need to get that darn second book finished to address the other 10%.

An interview with ALEC

I really appreciated being allowed to share my work with ALEC at their recent conference in Phoenix.  I saw a lot of great nuts and bolts activity going on there in the service of creating an equitable and economically vibrant nation.

Here is a short interview from the conference.

Great Review of Shut Out in the Economic Record

Declan Trott, an economist with Australia's Department of the Treasury, has written a very nice review of Shut Out for Economic Record, a journal of the Economic Society of Australia.  It offers a concise and well-written overview of the book's thesis.

Unfortunately, there is a pretty hefty paywall.

A couple of brief excerpts:

But what if this fall in prices were not the inevitable bursting of a bubble, but an unnecessary and self-inflicted panic? This is Kevin Erdmann's contention. . . This is a provocative thesis, not to be accepted lightly.  Yet Erdmann has assembled a formidable battery of data and argument to support it.

. . .

It is the detailed documentation of the (housing bust), and the treatment of the entire episode as a panic rather than a bubble, that is Shut Out's key contribution relative to the academic literature. 

. . .
And, I was flattered by his closing comment.

As a member of the PhD tribe, I occasionally found myself wishing for more equations and regression coefficients, and simpler charts.  But still, somebody should give him an honorary degree. 

That sounds just like my editors and internal reviewers.  Why does everyone hate complicated charts so much? Anyway, this review was a pleasant Thanksgiving surprise.

FEECon 2019

I will be at FEEcon 2019 in Atlanta on June 14 for a panel on housing markets.

Looks like lots of fun and interesting things are happening there.

Here's a link:
https://www.feecon.org/

And here is more about FEE:
https://fee.org/

If you will be there, be sure and say hello.  And, if you will be in the Atlanta area, check it out.

IW on the web

Tech entrepreneur David Siegel has an interesting and thorough post up at medium.com that is a sort of reference point to cutting edge or wise thinking on a vast array of topics.  One reason I am posting a link here is because David kindly includes the work of Scott Sumner and myself on the financial crisis and the housing bubble, prominently, as work that should be read and understood.

Regarding our work, he begins with:

Understanding the Great Financial Crisis

A good way to see the storytelling effect is to look at the “common wisdom” of the Great Financial Crisis of 2008/9, an event that impacted every person on earth and destroyed a billion jobs. Almost everyone got the story wrong. Michael Lewis’s book and movie, The Big Short, was popular but completely missed the true cause and effect. So did Niall Ferguson and many experts.

In reality, two people — Kevin Erdmann, an investor and Scott Sumner, an economist — have shown that the “common wisdom” does not fit the facts. Using the scientific method and hard evidence, they show that the GFC was a result of bad reactions to scarce resources

I appreciate David's support and his willingness to consider this new point of view.  But, in addition to that, his post can be fruitfully used as a starting point into inquiry in a number of topics.

He lists my book "Shut Out" as an "advanced" reading.  For those visiting IW from David's post, if you don't want to dive into a long tome of "advanced" reading on the topic, here are a couple of shorter pieces that may get the ball rolling.  I'm not sure they are any more accessible, but they are much shorter, and introduce the basics.  (My writing tends to be analytical rather than narrative, but I don't think you will find any of my work to be nearly as difficult as, say, the typical academic article in an economics journal.)

Housing Was Undersupplied during the Great Housing Bubble

The Danger in Using Monetary Policy to Address Housing Affordability

More talkin'

I had a nice conversation with Josiah Neeley of the R Street Institute and Doug McCullough of the Lone Star Policy Institute on their podcast "Urbane Cowboys".




Elsewhere, Emily Hamilton, a research fellow at the Mercatus Center was on the Marketplace Morning Report, on NPR, discussing housing.  (Her segment starts at about 5:20.)  She was there, in part, to discuss a new brief co-authored by her, Salim Furth, and myself.


Also, some readers might be interested in this.  I don't work for this firm, Hoya Capital, but I found out that they just started a new housing ETF that is partially based on some of the same ideas you see here at IW.  The ETF is meant to give investors broad exposure to the housing market in general - including builders, REITS, lenders, etc. - so that investors can gain from a supply recovery in housing, however that recovery ends up being shaped.  That's my brief attempt at describing it, but certainly, if you are interested, you should peruse the details at the site.

Writing and talking

Garrett Peterson kindly asked me back on the Economics Detective podcast.  It's always a pleasure to chat with Garrett.  The podcast is here:






And, here is an op-ed in the Los Angeles Daily News:

Claiming that building more L.A. housing would only benefit newcomers misses the point. The newcomers are coming already, and they aren’t waiting for L.A. to build them homes. Rest assured, until the rate of new building is increased, the homes that those newcomers will take will still be provided, quietly and sadly, one unit at a time.

Washington Examiner reviews "Shut Out"

Joseph Lawler at the Washington Examiner did an excellent job writing a detailed review of "Shut Out".

He even contacted Mian and Sufi both for comment. (Their work is subjected to extensive reinterpretation in the book.) They understandably didn't have time to provide thorough feedback.

I will be very pleased if every journalist has anywhere close to the understanding and accuracy that Joseph has.

Talking Housing on C-Span

Washington Journal kindly invited me to chat on Washington Journal the other day.

Of course C-Span is top notch, and the host, John McArdle, had great questions.  I was pleasantly surprised that the callers also had questions that generally got at the heart of the problem in one way or another.

"Shut Out" is officially published today

I will be on C-Span Washington Journal tomorrow (1/23/19) at 8am EST to talk about it.

Here is a nice review by Tyler Cowen.

And another by Ben Cole.


Enter this code on the Rowman & Littlefield site for a 30% discount: 4S18MERC30

Housing: Part 340 - Wall St. Journal Op-Ed

I have an op-ed about the Closed Access problem and its influence on the financial crisis in the Wall Street Journal.

https://www.wsj.com/articles/rich-cities-created-the-housing-shortage-11546804458

Discounted Pre-Orders for "Shut Out"

"Shut Out: How a Housing Shortage Caused the Great Recession and Crippled Our Economy" is now available for pre-order.  It will be ready to ship in January.

Great news: Enter this code on the Rowman & Littlefield site for a 30% discount: 4S18MERC30

If you know anyone who might be interested in the book, this is a good chance to get it at a better price: $28 instead of $40.

The Wall Street Journal gives my work a shout out.

Holman Jenkins at the Wall Street Journal has noticed my work.    He does a good job in the first couple of paragraphs of laying out the basics of the work and tying it into Scott Sumner and the market monetarists' point of view on the Fed and the crisis.

Looks like word is starting to get out.

New podcast out on my housing research

Here I am talking with David Beckworth about my housing research.

https://soundcloud.com/macro-musings/kevinerdmann

Housing: Part 312 - An introductory slide deck to my new view of the housing boom and financial crisis

Here is a slide deck introducing my work on the housing bubble and the financial crisis.  I will keep a version of this in the page links in the right margin, for future reference.

My new policy brief at Mercatus

My new policy brief is up at the Mercatus Center.

Most of the content will look familiar to IW readers, but this is probably the best summary of the basic argument - that undersupply of housing caused the housing bubble.

https://www.mercatus.org/publications/housing-was-undersupplied-during-great-housing-bubble

Here is the take-away:

For a decade, the collapse has been treated as if it was inevitable, and the important question seemed to be, What caused the bubble that led to the collapse? This needs to be flipped around. Given the urban housing shortage, it was rising prices that were inevitable. So the important question is, Why did prices and housing starts collapse even though the supply shortage remains? And why were housing starts still at depression levels in 2011?
The surprising answer to those questions may be that a housing bubble didn’t lead to an inevitable recession. It may be that a moral panic developed about building and lending. The policies the public demanded as a result of that moral panic led to a recession that was largely self-inflicted and unnecessary. They also led to an unnecessary housing depression that continues to this day.