Zillow Reading List, August 20th
At Zillow Research, our days are fully consumed with bringing you the best, most interesting and most actionable real estate research around.
But to that end, we also find time to read a variety of reports, news stories and investigations, on any number of issues, from social justice, to economics, to real estate and sports. We read them for education, for entertainment and out of pure curiosity – and each one helps us discover new questions we want to answer and helps identify new trends worth following.
Zillow Reading List is a regular roundup of these interesting pieces we come across, with some thoughts about each and how it ties into our existing research and/or has spurred new questions. We’ll post these roundups regularly, and of course will continue to strive to publish research that is as enriching, thought-provoking and useful as these pieces have been to us.
Enjoy!
Josh Zumbrun in The Wall Street Journal
For a while now, there has been a popular narrative developing about how millennials are a generation apart – that unlike their parents and grandparents, millennials don’t want to be committed to anything. The line of reasoning goes something like this: Why own a car, when you can use Uber? Why get married when you can date long-term? Why stay at the same company when you can easily switch jobs? Why buy a house when you can rent?
At Zillow we have been staking out the other side of the debate, arguing that millennials, at their core, really aren’t all that different from prior generations. What is different are the economic circumstances under which millennials have come of age. The recession might have pushed them back a bit in terms of their life plan. But we feel confident that, at least when it comes to housing, they will actually be fairly similar to other generations and perhaps are even more conservative than their parents. In fact, we predicted that this year millennials will make up the majority of home buyers.
Now we have some evidence that, at least when it comes to marriage and family, millennials are indeed starting to become more traditional. Increasingly, the children of millennials are being born to traditional families of married parents. It’s a little too early to declare a winner in this millennial debate, but it is hard not to feel a little vindicated about our predictions.
Cory Weinberg in the San Francisco Business Times
For those tracking housing permits in the San Francisco Bay Area, the local Board of Supervisors has delivered some welcome news in announcing their consideration of legislation meant to relax height and density limits. We have long worried that however well-meaning, successive regulations on construction combine to create an environment that makes it very hard to create new housing supply in areas where demand in highest – a trend we call the “tyranny of small decisions.”
This latest announcement seems like a step in the right direction towards easing San Francisco’s affordability crisis and helping spread the geography of construction. Currently, new construction is concentrated in a small handful of markets, and local public services and transit are struggling to maintain capacity. On the other hand, this proposal demonstrates just how hard it is to make significant changes. This proposal is estimated to add 7,000 housing units over the next 20 years, or roughly 350 per year, a drop in the bucket for a city that regularly attracts more than 10,000 new net residents annually.
Bruce D. Meyer, Wallace K.C. Mok & James X. Sullivan for the National Bureau of Economic Research
Zillow loves survey data. Large national surveys like the Panel Survey of Income Dynamics often provide us with the best view of long-term trends in housing, allowing us to ask questions and examine trends that began well before the start of Zillow.
We also love running our own surveys. There has always been a debate within the economics profession around the value of asking people about their motivations and preferences, as opposed to inferring them from data. But our view has been that simply asking people is sometimes the easiest way to dive into the deeper motivations behind the decisions seen in economic data. Unfortunately, response rates for these surveys have been declining over time, making it increasingly more difficult to interpret the data. Something to keep in mind as we continue to analyze this data.
The Puzzle of Hispanic Homeownership
Brentin Mock for CityLab
If current demographic patterns continue, an increasing share of the country will be Hispanic and Latino in coming years. Interestingly, they look quite different from other groups when it comes to housing, most notably the fact that their homeownership rate has been declining even as their economic circumstances have improved.
The demographic ascendancy of Hispanics, combined with their historically lower rates of homeownership, has prompted some to predict this group will eventually help drive the national homeownership rate below 50 percent and turning the United States into a nation of renters.
Much of the lower Hispanic homeownership rate can likely be explained by poor credit access for these households. Hispanic households are more likely multigenerational, and fitting into the narrow boxes of current credit availability can be hard for those households. But our view is that these issues are not insurmountable and the market will respond to this growing demand and improve access to credit for these households, in turn boosting their homeownership rate.
