Friday, June 24, 2011
SAN DIEGO The supply of housing tells us a lot about what our societies and families look like. The reduction in home sales we’re seeing today has made our households – and our cohabitating families – bigger and more multigenerational.
A lock down in mortgage lending, coming out of the housing crisis, means buyers can’t get financing and sellers can’t find buyers. This means people are doubling up in one house. Kids are living at home with mom and dad. Housing analyst John Karevoll told me unhappy couples are putting off divorce because they can’t afford separate homes.
A story from NPR today added the expression “household formation” to my lexicon. It’s the thing that even happy couples can’t do these days because they can’t find a house in which to do it.
The result of all this is pent-up demand. When something is pent up it wants a way out. Economists I’ve talked to say the way out in this case will be a positive shift in the unemployment rate and a willingness by banks to offer reasonable financing deals. Once that happens sales are expected to increase dramatically.
But sales of what? One study concludes that apartments and condos will the hot item. The new economic reality simply doesn’t support the notion of having a detached single-family home with five bedrooms.
The housing crisis was a huge event for our economy and our way of life. The release of pent-up demand will eventually bring the housing market into a healthier state. But the old days are gone and it’s hard to say what the new days of housing will be.