On VoxEU, Gianni La Cava summarizes his research on the secular rise in the housing share of US income.
In the US national accounts, income accruing to the housing sector is measured as ‘net housing capital income’, or simply, net rental income (i.e. gross rents less housing costs, such as depreciation and property taxes). This measure includes rental income going to both owner-occupiers (imputed rent) and landlords (market rent). The very detailed nature of the Bureau of Economic Analysis’ regional economic accounts allows for similar estimates of housing capital income to be constructed for each US state spanning several decades. …
The owner-occupier share of aggregate income has risen from just under 2% in 1950 to close to 5% in 2014 … . The share of income going to landlords (i.e. market rent) has also doubled in the post-war era. But, in aggregate, the effect of imputed rent is larger … because there are nearly twice as many home owners as renters in the US economy. …
… the long-run rise in the housing capital income share is fully concentrated in states that face housing supply constraints.
In a blog post, May Rostom documents that “secured debt is rising super-fast for the young.”
Over the life cycle, each generation accumulates household debt until reaching age forty or fifty, and repays afterwards. But the level of indebtedness (in real terms) has increased from cohort to cohort, and peak indebtedness has shifted to older age. The amplitude of the income paths has not changed to the same extent—“income growth has been unable to keep up with the pace of house price inflation.” Moreover, while “the younger groups have taken the lion’s share of the increase in debt from 1995-2012, … the biggest winners [when it comes to wealth accumulation] have been the older generations.”
In a Project Syndicate column, Edmund Phelps documents structural problems in Greece. He emphasizes that other EU countries face similar challenges.