Secondary Sources: Overvalued Cities, Fed and Mortgages, Recession Jobs
A roundup of economic news from around the Web.
- Most Overvalued Cities: CNNMoney ranks the most overvalued housing markets in the U.S. ” In January 2006, CNNMoney published a reputation of 299 U.S. housing markets, showing where home prices were most overvalued. Small was undervalued: Real estate was white-hot and prices were at or near what later proved to be their tops. A total of 213 cities were overpriced, and Naples, Fla., was deemed the most insane, with 84% of homes valued over a honest market price, according to statistics compiled by National City Corp. and IHS Global Insight. That finding so rankled the Naples Chamber of Commerce and area real estate agents that they hired economists to dispute the evaluation, according to Richard DeKaser, the real estate consultant who engineered the report for National City. What a difference four years makes.”
- Fed Mortgage Buys: On voxeu, Johannes Stroebel and John Taylor say the Fed’s buys on mortgage backed securities have had small effect. “Should the Fed scale back its ownership of mortgage-backed securities? This column analyses the effect of the programme on mortgage interest rates. Controlling for prepayment and default risk suggests the programme has had small or no impact, and that the Fed could gradually cut the size of its portfolio without a significant impact on the mortgage market.”
- Recession Jobs: Enrique Martínez-García and Janet Koech at the Dallas Fed look at the labor market during recessions. “A historical look shows that the labor market impact hasn?t been as brutal in the current recession as it was in the Fantastic Depression. While the latest episode has a lot in common with the post-World War II experience, it?s unusual in the length and depth of its labor market reach. It was the acceleration of employment losses after October 2008 that transformed an otherwise average recession into the worst episode since World War II. Uncommon labor market data sources use uncommon conceptual definitions and methodologies. Measurement issues can complicate the interpretation of aggregate data, and sometimes aggregation itself can mask vital structural changes.”
Compiled by Phil Izzo