Nice post Cam. I think the declining rent share over income quintiles really demonstrates that rent burdens are primarily a problem of inequality. And public housing can combat that for low-income households while also providing the benefits of an outside option.
One thing that's missing with these measures is the size/location/quality of the housing that's being purchased. Where upzoning increases central densities, it can help people move to higher-amenity locations, even while their housing spend doesn't necessarily fall. I wonder whether a [% of income spent on housing & commuting] could be crude improvement on the above measures (and whether those would also be flat)? Or combining them with metrics on average floorspace & time spent commuting?
Part of the difference between the cross-sectional and time-series income elasticity comes from land being a positional good. If my income increases, but no-one else's does, I might move to a better location and pay more rent. If everyone's income increases we can't all move to a better location, and we will just bid rents up.
I think the common sense is missing here. When someone’s income goes up in the US they look for better housing in areas where it costs more so the % stays relatively flat. You earn more you look for better housing, simple. Also as you progress in your profession you look for better housing or nearer to work which if you work in a city may cost more. Just as you would choose to spend more for a cruise or luxury vacation or whatever you choose to upgrade where you live. When you are low income or on government subsistence you don’t always have that choice so it is good to work to educate and better yourself for the benefits that come with it.
Nice post Cam. I think the declining rent share over income quintiles really demonstrates that rent burdens are primarily a problem of inequality. And public housing can combat that for low-income households while also providing the benefits of an outside option.
One thing that's missing with these measures is the size/location/quality of the housing that's being purchased. Where upzoning increases central densities, it can help people move to higher-amenity locations, even while their housing spend doesn't necessarily fall. I wonder whether a [% of income spent on housing & commuting] could be crude improvement on the above measures (and whether those would also be flat)? Or combining them with metrics on average floorspace & time spent commuting?
Part of the difference between the cross-sectional and time-series income elasticity comes from land being a positional good. If my income increases, but no-one else's does, I might move to a better location and pay more rent. If everyone's income increases we can't all move to a better location, and we will just bid rents up.
I think the common sense is missing here. When someone’s income goes up in the US they look for better housing in areas where it costs more so the % stays relatively flat. You earn more you look for better housing, simple. Also as you progress in your profession you look for better housing or nearer to work which if you work in a city may cost more. Just as you would choose to spend more for a cruise or luxury vacation or whatever you choose to upgrade where you live. When you are low income or on government subsistence you don’t always have that choice so it is good to work to educate and better yourself for the benefits that come with it.