California's lackluster permitting (+ New England's) is even more stark if you look at permits per capita in a longer-run context. From our paper on 100 years of building permits in the US: papers.ssrn.com/abstract=485...

11/ Armed with permits in particular areas as a leading indicator, policymakers might be able to prevent runaway housing market booms by restricting credit access in markets headed towards “overbuilding” risk, such as Austin, TX and other reservoirs for “digital nomads” over the past two years.

10/ One stark example of the soft info permits contain comes from the 2000s subprime mortgage crisis. Areas which had the largest concentration of subprime MBS loans as of 2005 are the same states where swings in permits predict asset market movements a year later.

7/ This was a massive data effort, which took us and a team of RAs nearly 3 years. We used advanced OCR and deep learning techniques to digitize historical records, allowing us to cover all 50 states and the largest 60 MSAs (with an extension to all 3,000+ counties in the coming months!)

6/ In most states, new housing permits per capita peaked in the 1970s. After the Great Recession, permits collapsed, recovering somewhat in the sunbelt states which have experienced large net migration over the last 30 years. New housing supply appears unable to accommodate demand from residents.

5/ Beyond predicting financial downturns, we use our data to establish new facts about long-run housing supply. > 80% permits for single-family homes are completed, meaning permits often translate to new housing units. Avg. completion rates are much lower in high-regulation regions like New England.

Regulations increase construction costs, reducing permits, and creating longer, more variable lags between permit applications and new housing units completed. This can be seen in the strong negative correlation between permits and measures of regulatory stringency, such as the "Wharton Index."

3/ Geographic variation matters a lot. Housing supply-elastic states like Florida, where land use regulations are lax, are bellwethers. In contrast, states like Connecticut, where policies render it difficult to build, have very little ability to predict downturns.

2/ Key finding: Boom-bust cycles in residential building permits, as captured by building permit growth (BPG) volatility, are a harbinger for future stock and bond market fluctuations across most recessions over the last century.

Excited to debut my new paper, "Housing Is the Financial Cycle: Evidence from 100 Years of Local Building Permits,” joint with @cortesgustavos.bsky.social. We document that building permits predict financial market volatility across a century of U.S. economic history.
papers.ssrn.com/abstract=485...

Property Assessed Clean Energy (PACE) loans are a new low-screening contract which allow homeowners to borrow through their property taxes to fund climate-resiliency and energy efficiency home improvements. This is a timely topic given continued rebuilding efforts from Hurricane Helene and Milton.