Posted on 05/30/2011 9:29:40 PM PDT by 2ndDivisionVet
The U.S. housing market is going through an adjustment of historic proportions. Before 2006, when the housing slump commenced, American home builders regularly built as many as 2 million new houses annually, rarely less than a million. This amount was needed to keep up with new household formation, immigration, homeowners moving up, and replacement due to obsolescence. Since then the number of new houses built has dropped drastically—the seasonally adjusted annual figure announced by the federal government in February 2011 was about 400,000! What's going on?
The recession, obviously. High unemployment and unease about the economy have made potential first-time homebuyers leery of entering the market, and many have decided to wait on the side lines. Although house prices have fallen, few are convinced that they have bottomed, and no one wants to buy a house and see its price decline. The large number of foreclosed (or about to be foreclosed) houses on the market, which account for no less than four out of 10 sales of existing homes, likewise dampens demand for new houses. And those willing to take the plunge discover that, despite low interest rates, lenders who were burned by the subprime mess now require large down payments. The other chief cause for weak demand is a slowdown in household formation—the U.S. Census reports that the rate of household formation is currently lower than at any time since 1947, as people put off getting married and starting a family. According to my colleague, real estate economist Peter Linneman, the marginal household size, which has historically hovered around two or three, shot up to more than six in 2009 and 2010, the result of doubling-up and moving in with relatives.
Common wisdom is that eventually the housing market will stabilize.....
(Excerpt) Read more at slate.com ...
smaller: I can see that. Closer together, not so much.
Wrong. When the housing market returns, we’ll want less government interference. Then folks will buy what they want and what they can afford.
How dense can folks be?
Send about 30 million illegals back across the river and points beyond and we will have plenty of houses to go around. It’ll ease up the fuel demand. It’ll ease up government expenditures. It’ll raise education standards. It’ll open up the job market. It’ll ease up on crimes. Other than a major voting block, where’s the down side?
This is the ruling class vision of how we “little people... taxpayer peons” should live.
yeah, I bought too much house back when things were going better. I love it but I wish I hadn’t bought it. I think you’re going to see a lot of people becoming increasingly hesitant to buy a house from here on out. What used to be an asset/investment has turned into a big liability. With the economy going the way it is, everybody has their hand out too and the dumba%% voters seem all to willing to give them the property tax increases they want. I’m beginning to feel like an ATM and it looks like it isn’t going to be cheap or easy to escape that servitude. I don’t think I’ll ever buy another house.
I do not buy into the smaller homes close together...that is the problem now in the cities. Especially the big, crime-laden cities like Chicago, Philedelphia, DC, Detroit, LA etc etc etc.
Give me a home on the range...where the buffalo roam...etc
I live in a nice house on 5 1/2 acres. I would not choose to live in a cracker-box on a 50 ft frontage lot.
I am not rich, we live on SS and a small pension. And before you all go off on me for the SS, it is not an entitlement. I earned it. 15% of my pay for 40 years went into it. If that had been invested at a modest interest rate, I would have several millions in the bank now. Welfare is an entitlement. I am not on welfare.
How can a housing market recover without financing? It can't.
Notice how almost all of the expert predictions keep backing off on their guesstimates of a recovery? First it was late in 2010, then the summer of 2011. Now, I see in this article where an expert is saying between 2012 and 2016?
I agree with your estimation for both new homes and resales, a decade or more.
Government incompetence in social engineering is at the root of most problems, and dictating the size of a home and penalizing their sizes and compositions through taxation, building codes, and regulation are prime examples of such incompetence.
There was a time when some Southern homes were designed and constructed with a room in the center of the house with no windows to the exterior. During hurricanes and tornadoes, the central room provided some measure of protection against deadly strom driven shrapnel, espeically window glass and wooden splinters. Incompetent building codes mandating a certain amount of glazing to the exterior eliminated the windowless central rooms and put the inhabitants of the home at greater mortal risks.
Confiscatory property taxes compel the construction of new homes with wall to wall carpeting and no wood and/or tile flooring which is taxed at much higher rates. Residents with allergies are then confronted with dirty carpeting rather than the esier to clean wood and tile flooring.
Larger houses with high square footage is a much more efficient home to heat and cool by passive Solar constructoin methods than the smaller buildings. Old multi-story homes are legendary in their ability to buffer the hot air in the attic, keeping the lowr floors much cooler in even the hottest weather. At a time when the energy saving properties of these large homes are most needed to conserve energy resources and reduce consumption of fossil fuels, government compels home owners to make their homes too small to employ such passive Solar methods of heating and cooling.
At some point people have to wake up and realize government is the source of the problems and not the solution to the problems created by government.
This whole thing reminds me of a female county commissioner locally, who made it her mission to oppose “density” of development while promoting “walkable communities” and bike paths.
That’s what happens when you rely on buzzwording via focus groups, but don’t really have a clue what the buzzwords might actually mean. Those are going to be some long walks and long bike rides, lol.
People bought the bigger houses with all the bells and whistles because they could and because they were appreciating in value, and women were the prime motivator behind it. Reality has smacked them all upside the head and there will be an excess of caution well past any literal market bottom.
This trend to smaller houses is being driven by reduced incomes and inability to get approved for larger loans, let alone actually coming up for 20% down on a whopping big house that formerly required no down payment at all, or could even be had for a 110% or more loan with money back at signing.
Apparatchiks and bureaucrats will mistake this for a grand opportunity to, again, start championing condos and walk/bike oriented center city living, nevermind that those properties are faring even worse than the hated suburban McMansions. People want a little privacy and the ideal of the cottage with a picket fence is a powerful one that will not go away any time soon.
Government-encouraged malinvestment looms yet again, to jumpstart residential construction. They’re going to slap up a bunch of very close together houses with condos intermingled, probably with subsidized low income individuals thrown into the mix, too. Wouldn’t be “fair,” don’t you know. Wrong, wrong, wrong, it’ll fail again.
They’ll never get it because they’re adverse and even hostile to the notion of people buying what they want themselves, not what bureaucrats and apparatchiks find fashionable on the basis of ideology.
I did the math one time (please don’t make me do it again!) — every human being on the planet could comfortably fit in the State of Texas (or frigidly but with twice the arm-swing room in Alaska).
We don’t need to be closer and the urban planners who want to make it so don’t plan on living in their inventions.
“Send about 30 million illegals back across the river and points beyond and we will have plenty of houses to go around...”
A man after me own heart:)
We have 4 kids and have chosen to live in a smaller-than-average house (even though we have a larger-than-average family!) on a bigger-than-average lot.
Since in CA everything is price-per-sq-ft, we thought: why buy a single sq ft more than necessary? It’s just more to clean and walk through, and adds so much $$$. Our kids do each have their own rooms though—but we got rid of the dining room (built a wall) to provide the 5th bedroom. Every single sq ft of our house is used every day.
It’s nice to not see any neighboring houses. . .(well, I do see a glimpse of one). Big yards (or better yet, land) is the way to go.
Maybe a return to multiple families under one McMansion roof. San Jose has been the home of the return of the 1800’s boarding house.
My thought exactly.
Well, liberals will want their houses -- and everyone else's houses too -- closer together. They like the idea of row housing the same way they like trains.
>>Maybe a return to multiple families under one McMansion roof. <<
Any chance they brought back the hamburgler? And my man Grimace? And Capt. Crook?
Dang, now I am hungry!
There is some evidence that urban townhomes and infill housing are more popular, as rising gas prices increase the cost of commuting.
That presupposes that the jobs are in the central city. Many of the new jobs are in the suburbs along with the people. Shorter commutes are not from moving into the city, but moving to the right suburb.
Or smaller houses further apart.
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