Wednesday, June 08, 2016

Lehner: "The Housing Trilemma"

by Bill McBride on 6/08/2016 03:07:00 PM

Josh Lehner, at the Oregon Office of Economic Analysis, has an interesting post today: The Housing Trilemma

Every city wants to have a strong local economy, high quality of life and housing affordability for its residents. Unfortunately these three dimensions represent the Housing Trilemma. A city can achieve success on two but not all three at the same time. Underlying all of these tradeoffs are local policies as well.

Inspired by Kim-Mai Cutler and Cardiff Garcia, I set out to try and quantify the Housing Trilemma across the nation’s 100 largest metropolitan areas. It turns out to be very real. Just eight rank among the top half for all three dimensions of the Housing Trilemma. None rank among the Top 20 in all three. ...
The Housing TrilemmaClick on graph for larger image.
The reason these tradeoffs exist is mostly, but not entirely, due to market forces. People want to live in cities with a strong economy and high quality of life. Increased demand for housing leads to higher prices and lower affordability. Nice places to live get their housing costs bid up due to strong demand. The opposite is true as well. Regions with underperforming economies and a lower quality of life do have better affordability.
There is much more in the post.

 Here is some data from Josh on the 100 largest MSAs - and how they rank on all three dimensions.