Why oh why oh why will the news folks not think for themselves?
Housing starts were down 10% over the last month - the lowest level since the 1940’s - the news media are telling us.
That is fine, but it is the jeremiad, sky-is-falling, oh-my-oh-my-oh-my attitude that accompanies it that is disturbing.
New housing starts are falling for several very good reasons:
1) We have too many houses. Builders over-built. The rule of thumb - so we are told buried somewhere in an otherwise hand-wringing report on low starts on NPR - that one million new homes a year would satisfy the market. But builders built - and bankers loaned money for - two million new homes a year for a good part of the past decade. So roughly speaking, we have a glut of 5-10 million new homes on the market.
Rather than lamenting the fact that we are not adding enough new homes to an already over-stuffed market, shouldn’t we be celebrating the fact that the “invisible hand” is doing its thing? Or does that only work in one direction?
2) Not only do we have a glut of new homes, but thanks to the folks who brought us the recession by savaging the mortgage industry, we have too many existing homes on the market as well. When will the economists and market journalists recognize that enough is enough?
3) The very people whom the bankers-and-builders want to buy their new new-homes are the people whose investments, jobs and financial security the bankers-and-builders destroyed! Talk about hutzpah: first they build too much, bulk up the cost of the house, run a scam on the loan, crash a family’s finances and then complain when those same families aren’t buying their new stock.
I know: we are told that in the past, it has been the housing market that has pulled the economy out of its doldrums.
If you buy a house, you have to spend money on all that goes with it: appliances, paints, furnishings, art, tchotchkes, and that is supposed to stimulate the marketplace.
But perhaps we can look toward economic revival another way.
First, not far from the old way, we can look at home renovations. Remodeling and remaking existing homes can generate an ocean of new business and stimulate the economy with much less environmental degradation and waste than the creation of new homes.
A friend told me that for the first time in decades, more people are settling in, staying put, and renovating their houses less with an eye for resale and more with an eye toward personalizing their living space. That is, for the first time in ages, our houses are being seen first as our homes, the places that hold us close and bind us together with loved ones, the places that offer us refuge and peace, the places that we can personalize to fit our desires and our ways of inhabiting home, and only second as commodities, objects of resale for the future. That can be so very good for our spirits, our neighborhoods, our local workman and our economy.
Second, perhaps during such renovations we can build-in greater efficiencies, more energy-savings devices, better insulation. I would bet owners who expect to live in the homes they create will spend more money per house on such green amenities as better insulation, storm windows and efficient hvac systems than builders who build, sell and walk away. This dip in the new housing market can help cause a bump up in greener homes, an expansion of the green building market and decreased operating costs for homeowners.
Third, perhaps any money we save by renovating rather than buying new can be reinvested in other segments of our economy. We can begin to pay down our debts; buy greener, cleaner cars; pay those few extra pennies for local, organic foods which will eventually help bring the cost down for everyone; give a bit more tzedakah; get those music lessons you’ve been wanting; schedule that visit to the doctor you’ve been putting off; take that class you wanted to audit; buy tickets to the concert you thought you couldn’t afford.
If we cannot expect our shell-shocked financial theorists to see this new economic reality of ours, at least we should be able to expect our journalists to.
Low housing starts may not be the tragedy it is trumped up to be. Indeed, it may just be the green leading edge of economic recovery.