Wednesday, November 20, 2024
Hoover Institution, Stanford University
Paul Schmelzing, Hoover Institution research fellow and assistant professor of finance at Boston College, discussed his paper “Housing Returns and the Emergence of the Safe Asset, 1465– 2024.”
PARTICIPANTS
Paul Schmelzing, John Taylor, Melinda Acuna, Annelise Anderson, Hoyt Bleakley, Michael Boskin, John Cochrane, Steve Davis, Sami Diaf, Dixon Doll, John Duca, Elizabeth Elder, Christopher Erceg, Bob Hall, Laurie Hodrick, Robert Hodrick, Ken Judd, Evan Koenig, David Laidler, Roger Mertz, Valerie Ramey, Stephen Redding, J.R. Scott, Tom Stephenson, Jack Tatom, Yevgeniy Teryoshin, Victor Valcarcel, Marc Weidenmier, Alexander Zentefis
ISSUES DISCUSSED
Paul Schmelzing, Hoover Institution research fellow and assistant professor of finance at Boston College, discussed his paper “Housing Returns and the Emergence of the Safe Asset, 1465–2024.”
John Taylor, the Mary and Robert Raymond Professor of Economics at Stanford University and the George P. Shultz Senior Fellow in Economics at the Hoover Institution, was the moderator.
PAPER SUMMARY
This paper reconstructs house price and return dynamics in Germany over the very long-run, from the 15th century to the present, taking advantage of recent leaps in primary data. Contrary to existing consensus, I find that the ongoing contemporary “housing boom” in fact can be traced back four centuries ago, rather than originating in the mid-20th century. Similarly, the 1998-2024 era that saw house price growth outstrip income growth appears to be consistent with the historical norm, rather than an outlier driven by “bubble conditions”. Housing excess returns appear to be driven by credit and demographic factors over time, and characterized by a “Ushape” trajectory since the Renaissance. A major inflection point in housing markets appears to have taken place around the year 1650, when mortgage interest rates began their secular decline: indeed, the evidence from the housing market adds to growing signs that a more general major inflection point in asset markets occurred over the century between 1550-1650.
To read the slides, click the following link
https://www.hoover.org/sites/default/files/2024-11/Hoover%20Housing%20Nov%202024__Schmelzing.pdf
To view all of Professor Schmelzing’s research including the research he discusses at this event go to
https://www.pfschmelzing.me/home
