Letters to the Editor
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The Great Mexican Land Rush
Housing is like any commodity. This is like saying people need to eat less cornflakes to work off the excess supply of corn, when a box of Cornflakes costs ten bucks. Applied to housing, lets imagine the price of corn went too high, no one could afford corn, so farmers stopped planting it?
I am not concerned about the housing industry, however. The Mexico Land Rush will happen soon enough, and US home builders will be putting up homes all over Mexico, mostly Northern Mexico probably. Mexico has long had restrictions against foreign land ownership, but these restrictions are about to lift. One Mexican capital group is planning a major seaport south of Tijuana, that will rival the Port of Los Angeles.
Donald Trump is in Tijuana building condo's for future expatriot Americans, but also for middle class Mexicans. The fall in the dollar won't end until both economies have some relative parity. If the US market doesn't mark these existing homes down, then a glut of new, cheaper homes will replace them, and they will be built south of the border. Its ironic to watch the Bush administration work both sides of the street, first by destroying the dollar, which makes Mexicos economy more on a par with the US, and secondly by trying to prop up the US housing industry, and reinflate the asset bubble.
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A good sign
Does this Andrew Leonard know anything about economics? Housing starts are way down. That's because there are many unsold houses on the market. Why build more? Builders are being rational by waiting to build more homes until some that are already on the market are purchased. By slowing down on building new homes, they help stabalize the prices of existing homes. This is good news. Salon should hire a different writer who knows which end of the hammer to hit the nail with.
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Don't let the door hit you on the way south
This day has been coming since the Reagan years, when the American dream shifted from owning a home in a good neighborhood with a good job, to owning 15 houses and selling them off at inflated prices so you, yes you, can be a millionaire too. This push to create uber-wealth has so distorted our economy that like energizer bunnies, the developers just can't stop developing, even when it's OBVIOUS that there are not enough buyers for all these houses.
Now the news is that the big bucks are over the border, even though no one can afford to live there but the independently wealthy (duh, no jobs there, and no middle class).
Hopefully the "greed is good" gang will follow the Donald down to Mexico and leave us the hell alone, Maybe then our economic paradigm can shift back to the basics: Everyone deserves an education, a living wage and a safe, affordable place to live.
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@folger
Read the whole article before you shoot your mouth off. Andrew pointed out that the reason for fewer building starts was an over large invertory of unsold housing.
Developers where I live were a little late stopping though. In the 3.5 mile drive between my home and my job I pass at least 40 brand new +3500 sq ft homes some of which have been finished now for over 6 months and haven't sold. I'm waiting to hear on the news about the squatter community growing up in south Tualatin.
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What is the life expectancy of a house?
Our population of houses is somewhat like our population of population. There is some "replacement rate" for houses and apartments, the number of new houses needed to replace old houses that wear out, fall down, burn down...
So we always need some level of new housing starts. I guess that houses in general last longer than people. e.g. We have many more 100-years-old houses than 100-years-old people. But, I guess that this population analogy might provide some interesting insights into the housing industry.
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RD: Last one out turn out the lights
The American standards of housing are unsustainable. They are among the highest in the world. Meanwhile America has lost its industrial base, destroyed its financial standing, and dissipated its military might in a series of debilitating foreign wars. The American standard of living is quickly becoming equitable with that of India, China, and Mexico. Too bad, Wall Street thought globalism meant everyone would be living large by now.
The next thing for housing should be technological advances which greatly reduce the need for renewable resources, like lumber, and which are more labor efficent. The great wooden framed McMansions will sit empty, like Roman castles in Europe, only they won't last as long. Secondly the strain on water resources will make permanent communities less viable. Communities will build up around water sources, and then disappear when the water is tapped out, as Americans become increasingly nomadic. Part two of the Great Mexico Land Rush will be based on desalination technology. Mexico has a large expanse of coast line.
Greenspan doesn't refer to it those terms, but he has always spoken of the America's mobile workforce, as a good thing. Eventually those workers moved to China, and nobody told us. He also suggested a more liberal immigration policy to supply the labor for America's manufacturing needs. People, and businesses will escape to Mexico to avoid regulation, to find cheaper labor, and affordable housing. The outsourcing of American businesses will continue.
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@Iaint
Folger's not too wrong overall, though. Yeah, Andrew made the point of unsold inventory needing to get cleared out, but he's missing a big point: while the housebuilding megacorps are sucking wind, the smalltime contractors dependent on local business are mostly getting by, due to the same problem: nobody can sell their house, so instead of buying a nicer one, make your current house your dream home.
My retired engineer father in FL still does freelance work for contractors specializing in decks, patios, pools, kitchens, etc. People who still have decent credit and/or equity are still able to get loans for additions and upgrades. Dad's been reviewing an average of 4-5 new plans per week for a nice engineering fee. This is in FL, remember, where the housing resale market isn't likely to come back anytime soon.
Just remember, even the darkest storm cloud can still have a silver lining somewhere.