So failing to cite a quote that doesn’t address my claim is cherry picking?

My more general point is that you are talking about the housing market, without giving any thought to the dynamics, financing and mechanisms of that market. To propose a simple solution to a complex problem and back it up with your own vague platitudes (frex: As for units off the market, they would be brought back onto the market as prices rose, as they would when demand increases. ) is, at best, naive.

The relevance of talking about mortgages is they reflect the non-health of the market. A real-world fact that you need to recognize.

The other thing you seem not to have thought about is immigration itself. Your solution explicitly calls for bringing in some number (5 million?) high-skilled, wealthy immigrants. What are the mechanics, logistics, dynamics and timing of achieving that goal? And don’t forget the national security aspect of all this. More practically, there is pretty strong anti-immigrant fervor at the moment, riding a wave of Republican polemic. This is a real and non-trivial social dynamic.

In a meta sense, I shouldn’t have to specifically contradict any of your assertions, nor achieve anything beyond (real or imagined) vagueness. This is not a dorm room debate, despite your efforts to turn it into one, and I’m not trying to bring you to a particular point of view. I am trying, vainly, s it turns out, to get you to stop being both abstract and obtuse, and to start thinking more deeply, clearly, completely and realistically about your own POV.

A blog is a fine place to float half-assed ideas, ‘cuz – well, it’s a blog.

But if you are unwilling to meet other viewpoints in a more thoughtful way, you’ll never develop your idea into something serious.

Capishe?
JzB

For instance, you’re point about mortgages seems completely irrelevant. Ok, so it’s harder to get a mortgage today and the demand for mortgages has gone done. That doesn’t mean that high-skilled, wealthy immigrants will be unable to get mortgages, at most it just may be harder. And to the extent that it is more difficult, then they rent, which is still an increase in housing demand. More households, more housing demand. None of the things you mention will affect that.

As for units off the market, they would be brought back onto the market as prices rose, as they would when demand increases. Again, sticky prices, credit intermediation problems, and all the other stuff you meant won’t affect that.

Also, you repeatedly mention that housing is an outcome of general economic conditions, but it is a recursive relationship: if you could exogenously increase housing demand, it would improve the macro economy. That’s what I’m proposing.

If immigration was used to bring supply demand into line then that should set prices at a normal market rate not an increasing market rate. We have been far above normal market rate for housing for a long time (by almost any measure you choose, price to income, equivalent rent, case shiller at over 200 when it had never before exceeded 120, etc).

Housing operates differently than most markets because people anchor their expectations of selling price based on what they paid, what they owe, sentimental value, and even what they have previously seen prices going for. Because of that prices still have not dropped as low as they would have if the houses had been a more basic and easily transferred kind of asset.

So adding new immigrate buyers or renters into the mix right now will likely have minimal impact to drive prices higher. They will simply allow a houses to move a little bit faster and perhaps stabilize prices a bit here rather than them falling further.

But more importantly, this notion that people have that returning to house prices that lets people get back to net equity in their houses is a good idea is a bit baffling to me. Many people had to take out liar loans, ninja loans, option ARM loans, any thing you can think of to be able to get into these houses at the prices that existed in the market this past 5-6 years. And this was with interest rates at all time historic lows. What we learned was that many of those people cannot withstand the resets and the high payments that these loans required. And those that weren’t willing to take on such drastic means simply could not afford to buy a house at such inflated prices.

Why on Earth do people still advocate for returning to some kind of house pricing model that puts us back into a situation where people can’t afford houses without resorting to means that we already know lead to bad end results a few years down the road?

There is no way to get the people with negative equity out of their situation without returning to a housing market that is unaffordable. Those people have to walk away and the economy has to absorb those shocks and hopefully we will be smart enough not to go down the road of drastically overpriced housing stocks for a long time.

So even if immigration would increase house prices (which I don’t believe it would), such an outcome is one I would consider a long term net negative and certainly not any kind of positive (And I am a real estate investor who would benefit greatly by rapidly increasing house values).

You are bright and earnest, but – as much as I respect that – there is a fundamental problem with several of the ideas in this and other of your posts. You acquire what you think is a beautiful idea, but lack a reality check on your basic assumptions, and your thought processes.

You fail to give consideration to obvious counter-arguments, and do not seem to be willing to meet them head-on when they are presented. In fact, you seem to find the exercise annoying.

You are proposing a solution for vacant housing that ignores the mechanics of the housing market, the current situation of the housing market, the nature of surplus stock, price stickiness, etc. and focuses on a single variable, which in the current situation is of marginal relevance.

You and I pulled isolated items out of a study that look like they support each of our widely divergent viewpoints. If you refuse to understand that that is cherry-picking, you are simply in denial.

To Rebecca’s point, some fraction of the current stock is high end, built to target bubble pricing, that might not be marketable at all.

Mortgage applications are at a 14 Yr low – looks pretty broken to me. That goes back quite a ways even before the bubble.

http://www.marketwatch.com/story/mortgage-applications-to-buy-homes-hit-14-year-low-2010-07-14

But this information does not fit your agenda.

There have been close to 4 1/2 million foreclosures since the beginning of 2008, and they are occurring more frequently now than at any time ever. I have no idea where these people are living. The official count on homelessness was over 1.5 million, more than a year ago with estimates of over 3 million.

There are lots of potential owners/renters out there, who cannot afford the houses they used to think of as their own. Houses deliberately withheld from the market to temper supply overload are not going to be occupied by anybody. I have no idea what happens to incomplete structures abandoned by developers. But this is once again getting bogged down in minutia.

You would develop better critical thinking skills if you stopped arguing with me, the person, and started taking on a serious consideration of facts and data that don’t line up with your view point.

I might have everything wrong, and you might be totally right that immigration is the solution. But the argument you have presented is too shallow, incomplete and one-dimensional to be taken seriously.

You really have to do better.

Cheers!
JzB

I’m not sure how I’m cherry picking within this study. Neither the quote you showed or anything else in there refutes the point I am making, so you haven’t really shown that I’m cherry picking except to just call it cherry picking.

You keep saying the market is “broken” so an increase in demand won’t increase prices. There was still hundreds of billions of dollars of home purchase mortgages originated in 2009, so it’s not that banks won’t lend to borrowers. Also, even if all immigrants just rented it would have a hugely positive impact on vacancies, since rental vacancies are included in the graph in my original post. And this would lead to single family homes being converted to rental units, which would increase the demand and price for them.

And finally, I don’t think immigration will have a negative effect on unemployment, so I don’t have to decide whether the positive or negative effects outweighs the other. You do though.

Second, I made a number of substantive objections, which you have chosen to ignore, and instead trot out this study and then cherry pick a single point on an extremely complex issue which happens to line up with your pre-conceived notion. This is not giving you dorm room bull shit. It’s an attempt to get you to think things through, and meet valid objections with a valid response.

I might be wrong on any of the points I made, but all of them are counter to your position, and none of them are throw-aways. If you are serious in your proposition, you need to deal with them.

An increase in demand can only increase prices if the market is working, and it’s badly broken. Banks aren’t dong their part.

And no, I don’t agree that increasing house prices will necessarily stimulate the economy in any simple A –>B fashion. House prices are a resultant, not a cause of general economic conditions.

Sure, a price increase will ultimately encourage new construction and therefore jobs – possibly as early as 2017. But the current overhang has to be dealt with first. And not only are banks not lending, they are withholding foreclosed properties from the market, to avoid depressing prices further – so there is hidden supply out there that will eventually have to be dealt with, and prices are still artificially and unrealistically high. This problem will take years to work itself out, and adding to the demand side now isn’t likely to do much, due to a non-functioning market.

Turn your last question on positive and negative effects around. You don’t know the balance point either.

The answer to your original question is that your solution is one-dimensional and simple-minded rather than simple. There is no discussion and people aren’t demanding it because it’s impractical in its own context, and counter-productive in others. When you have a brilliant idea and the world says, “Meh!” you might want to rethink your idea.

I’m just trying to help.

Cheers!
JzB

And no, these quotes don’t support your point. They argue unemployment effects housing. I agree, I’ve never disagreed. But this says nothing about whether immigration will cause unemployment. I’m not going to rehash all the arguments why, they’re on this blog for you to find. See Karl’s Lump of Labor post, or my arguments about why immigration would create Keynesian stimulus.

The second part of the quote reinforces my point. An increase in housing demand will increase prices, which will let underwater homebuyers who want to move get above water faster. This is stimulative for the economy. Do you disagree with this? Even if you think this positive effect will be counteracted by the negative employment effects you posit, how do you know which will be greater?

And no, these quotes don’t support your point. They argue unemployment effects housing. I agree, I’ve never disagreed. But this says nothing about whether immigration will cause unemployment. I’m not going to rehash all the arguments why, they’re on this blog for you to find. See Karl’s Lump of Labor post, or my arguments about why immigration would create Keynesian stimulus.

The second part of the quote reinforces my point. An increase in housing demand will increase prices, which will let underwater homebuyers who want to move get above water faster. This is stimulative for the economy. Do you disagree with this? Even if you think this positive effect will be counteracted by the negative employment effects you posit, how do you know which will be greater?

But – what the hell – I can cherry pick as well as you can.

From your link:

One of the biggest drags on the housing market
is the high joblessness rate. With more than 7.8 million fewer
establishment jobs than in December 2007, unemployment
held at 9.9 percent in April 2010. If the past is any guide, the
strength and sustainability of the housing recovery will depend
most on the bounceback in employment growth (Figure 2).
Unfortunately, most economists predict that the unemployment
rate will remain elevated as discouraged workers reenter
the labor force amid slow gains in jobs.

The overhang of vacant units for rent, for sale, or held off the
market (including foreclosed homes) is another serious concern.
Despite production cuts of more than 70 percent since
2005, the overall vacancy rate hit a record in 2009. In addition,
many current owners are effectively trapped in homes that are
worth less than the amount owed on their mortgages. If these
distressed owners want or need to sell, their only choices are
to walk away from their homes or write a check at the closing
table. This will inhibit a recovery in repeat home sales.

Kinda my point, wouldn’t you say?

Cheers!
JzB