Where I live they are building houses again. The neighborhood beside me should have been built 5 years ago but finally the bulldozers are in motion again. But don’t call it a recovery. There is no vibrance in the market. Just a subset of people escaping places like California with solid state jobs at the University.
But even here there is concern. 2 years ago the builders began again, thinking the market had finally turned. But after a brief uptick things settled down again. The all cash buyers disappeared and all that was left were regular people who actually needed mortgages.
And getting a mortgage is still pretty tough as the attached article outlines.
But I believe a small part (but a growing part) of the ongoing housing chill is that many people have finally seen through the rather idiotic obsession with always living in the largest house one can afford – or in many cases – one cannot afford.
In the run up to 2008 millions and millions of families were house poor. They had nice big, brand new homes, but they lived on credit and clung to the idea that they could always refinance all the debt they were racking up because the “value” of their homes continued northward.
Then the crash came. Then reality came. Then the foreclosures came. Then the insecurity came. Then the woe came.
In the wake many people learned that having the biggest house possible is actually pretty stupid. Many people looked around and thought to themselves, “You know the place I live in is pretty nice. I should camp out here for a while.” And that’s what they’ve done. I know a good number of people who have embraced this perspective.
Many folks have learned the value of being “house rich.” That the additional 200 square feet in closet space can translate into the cost of a week long vacation at the beach or on the slopes many years. That an extra bedroom means the difference between generally making it from month to month and consistently putting significant money away in savings.
This, in addition to a generally tenuous economy – even though the president on Tuesday said the “shadow of crisis had passed” – is I think a key part of why housing hasn’t taken off like the realtors and the developers had hoped. At least some people have gotten wise.
This, despite the fact that it retards the sales of new houses is actually a deeply positive development. If more people embraced a “house rich” perspective – and my sense is more and more people are – we might be able get our act together as a country.
Rampant credit driven consumption is not the cure for what ails us. A reality based economy, one in which credit is a tool but not a drug, is however.