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!
The Tech Boom and the Soul of Seattle
Nick Wingfield in The New York Times
A crucial challenge for cities nationwide is figuring out how to balance economic growth while still preserving housing affordability and neighborhood character. San Francisco, home to an exploding technology scene that has created a housing affordability crisis and a backlash against gentrification, is often held up as a cautionary tale in this regard. With this example in mind, Seattle has been searching for a middle way as part of a “concerted effort to create a San Francisco-like tech scene with fewer downsides.”
But while we applaud Seattle Mayor Ed Murray’s plan to add a significant number of units over the coming decade as part of this effort, it is also worth examining what the goals of an affordable housing program should be. Median home values in the city of Seattle are already north of $500,000, and even with today’s exceptionally low interest rates, it takes an income of more than $110,000 to afford the typical local mortgage, well above what the average household in Seattle makes. Is the hope that an affordable housing plan will bring prices down enough so that those in occupations less lucrative than finance and technology can afford a home? If so, we have a long way to go. Or perhaps the aim is to create small pockets of affordability within the city? But then how do we deal with the challenges of demand outstripping supply in those areas? Affordable housing is a valiant goal, but it is hard to know the best way to get there without a precise definition of what we are trying to achieve.
Do Homeowners Really Strategically Default?
Kristopher Gerardi, Kyle Herkenhoff, Lee Ohanian, Paul Willen in The National Bureau of Economic Reserach
Strategic default – homeowners with the financial wherewithal to make housing payments, but who choose to walk away because they are in negative equity and/or aren’t interested in pouring more money into a home that has lost value – has always been a controversial topic. Early research in the foreclosure and default crisis pointed a finger at these strategic defaulters as a prime driver of foreclosures. But a look at more detailed data from the PSID (one of our favorite non-Zillow data sources), this paper argues that strategic defaults really aren’t that common. The authors find that fewer than one percent of households that can pay their mortgage – those that are employed and have adequate savings – actually default.
If they hold up (more on this later), these findings are quite interesting. But they beg the question – why don’t more homeowners strategically default? In places like Las Vegas, there were (and still are) significant numbers of households so deeply underwater they will be making payments for a long time before any of their payments end up in their balance sheet in the form of home equity. Would many of them be better off walking away? Is our tendency to treat bankruptcy like a four letter word keeping them from making those payments well beyond what makes sense?
Anna Sussman in the Wall Street Journal
But before you go running to tell your friends about the newest findings on strategic default, you might want read this article on just how reliable results in economics journals are. We spend a good chunk of time each week catching up with the economic literature and what other researchers in the field have to say, so it is a little disconcerting to hear that a lot of the work in prominent economic journals cannot be replicated by outside parties. Recently, two economists asked authors of published economic papers for help reproducing the results from the original papers, but were unable to reproduce more than half of them, primarily because of missing data or code.
Some of this is understandable. At Zillow research, we try to give away what data we can, but we do face occasional constraints around proprietary data. But to help others out there build on our work, we also try to publish (or share on request) the underlying code behind our analyses whenever we can. Almost all the work academics do stands on the shoulders of giants, so it is vital to pass on that opportunity to the next generation of researchers
Do People Shape Cities, or Do Cities Shape People?
Nikhil Naik, Scott Duke Kominers, Ramesh Raskar, Edward L. Glaeser, César A. Hidalgo in the National Bureau of Economic Research
A little bit out of left field, this paper quantifies the change in the physical appearance of streetscapes. How does a city’s physical appearance impact its social and economic outcomes? And how does a city’s social and economic structure shape its physical appearance? These are the deep questions this paper is trying to address. Unfortunately, deep questions are usually the hardest to answer. And reading this paper left us with more new questions than answers about how urban change occurs and spreads in communities. But it’s definitely worth checking out, especially if you want to see how a computer algorithm decides if a street looks safe or not based on Google Streetview.
In Fast Company
And to finish, check out these interesting designs for what a city might look like if it was designed entirely for bikes – no cars allowed. It’s better not to think of this as a serious proposal (I can’t imagine how a carless city could move goods at scale), but it is interesting to think what cities might look like in the alternative universe of a Brooklyn hipster’s dream. Bike lanes in apartment buildings? Check! Cargo bikes replacing delivery trucks? Check!