I am a bit confused about your note, although I certainly appreciate your interest.

One reading of your comment is that you appear to claim that observations about the national real estate market are not very useful because you work in a local market. I believe the idea is that there is benefit to reviewing and applying the national studies to local environments with the recognition that the fixity of location in real estate markets requires a different specific analysis of each locale. However, for some questions, the correlation between national and local results is very high. Perhaps this is true, especially once lags are taken into account, for most questions in real estate. Sometimes national phenomena do not apply locally; there can be no doubt that this is also sometimes correct.

On another level, the reason why we have more studies, observations, findings, reports, etc. of the mythical “national market” is because there is a large audience interested in the findings so as to justify the costs of doing the analysis. Stated differently, it is too expensive to do an extensive analysis say, for Benton, PA. Careful studies require many things and players in local markets would benefit from extensive local studies but they are often just too expensive. Thus, local, quality research is often not available. The reality is that economic analysis is costly to complete and so we observe more nationally than regionally, more regionally than locally, and more locally than property-by-property.

I agree that it would be nice to know many more things about local markets. My comments about constitute an explanation as to why we do not have the information you seek.

AJJ

Thanks for your note. You probably learned more in Econ 101 than I did!

The determination of rents is complicated by numerous factors. Rental space is a substitute for homeownership so when potential homeowners are hesitant, demand for rental space could increase. However, in the current case, it is more likely that increases in supply with foreclosures, a reduced number of transactions so more houses are on the rental market, uncertainty about taking a long position in the housing market, etc., all move in the opoosite direction. It is impossible to predict whether a price such as rent would increase or decrease when there are both supply and demand forces at work. In this case, it seems reasonable to expect rents to fall with the large increases in supply of housing and the slowdown of real estate markets. In addition, there is evidence in some markets of rents falling. This type of reasoning above is why I suggested rents are headed downward. AJJ

Ist there way to print just the article information like RIS with a print link only for the information we would like to capture.

Harry@HarryMcCarty.com

With many current owners losing their homes, or walking away from them, shouldn’t the increased supply of “those looking for a place to live”, i.e., renters, keep the demand, and therefore the price, of rent high?

Maybe I should have paid more attention in my Econ 101 class at PSU – don’t worry, Dr. Jaffe, if YOU had been the Professor, I would have stayed wide awake and taken better notes, but I was there as a student before you started. (And those sorts of lines of praise and admiration, a/k/a “blarney” didn’t work for me back in 1973, either!)