Housing.com News, Analysis & Opinion: Wednesday Housing News

If the boom is continuing in the Midwest, that's where I see a sort of "bubble layering" taking place. The speculators and developers will eat up all the usable land they can to satisfy the insatiable demand for new homes and keep themselves in business. The major housing markets will see price slips and "corrections," as is evidenced by this MarketWatch report, found via the almighty Housing Bubble blog.

The big markets are softening, because there's just no land to go around and prices are too high. So developers are pushing inward, building new homes wherever they can and pushing buyers to take advantage. It's not a disconnect, just another sign that a bubble in one market is a flat tire in another.

I wonder, though...what do homebuyers really consider when they hear stuff like this? What job markets in the Midwest could support this housing boom, besides, y'know, housing and construction? And will Katrina/Rita reconstruction further the boom's "life support," or put an end to it because of high prices, loss of jobs, and inflationary warnings?

The development company at the center of the Kelo vs. New London eminent domain issue has been dumped by New London's city council. No doubt the bad publicity being poured on this small Connecticut hamlet has a lot to do with it. I'd like to think that it also has a small bit to do with the notion that stealing someone's home just to build shopping centers and office complexes is--gasp--wrong. If businesses like the NLDC took all the homes they wanted and built all the offices they wanted, who would be there to work in them? I sure as hell wouldn't fraternize any mall built where my backyard used to be. ;)

President Bush has sent in his own tax proposal to the table discussing tax reform. I'm sorry, but this just seems like crap. Eliminating virtually all corporate taxes? Limiting the mortgage deduction? Removing deductions for state and local taxes? Don't be fooled..."simplifying" the tax code is itself code, in this case standing for "We're taking more of your money and investing it for our buddies in 'seeing-eye' trusts and nontaxable offshore accounts in the Caymans." No thank you. This is as dead as Harriet Miers' nomination, only not as funny. ;)

Here's a fascinating essay on the decline of modern architecture and how "Peak Oil" may cause the end of civilization as we know it. If you can get through the first five paragraphs of pompous self-aggrandizement and gasbaggery, the conclusions Kunstler comes up with are worth hearing:

Yes, a lot of this talk about urban planning and related issues is somewhat academic at this point, in the face of the socio-political tidal wave of the global peak oil crisis coming at us. These days, I often tell audiences that in the decades ahead, the New Urbanism [compact, pedestrian-friendly mixed-use neighbourhoods] will be the Only Urbanism. Suburban development will come to a shockingly abrupt end.

The trouble is, we will be a much poorer society and we will not make an easy transition back to traditional living arrangements. The failure of suburbia will have turbulent political ramifications. There will be a fire-sale of distressed properties out there as the value of suburban real estate plummets. There will be a political fight over the table scraps of the 20th century. A lot of people will lose jobs. Vocational niches will disappear. A new social class of economic losers will emerge: the formerly middle class. They will be pissed off about the loss of their ‘entitlement’ to ‘the American Dream’. They will create a lot of political mischief. They may vote for maniacs who promise to make all this trouble magically go away. There will be a tremendous need to produce more food locally, and a lot of trouble making that happen, from the reallocation of land to the technical problems of food production with much-reduced fossil fuel inputs. A lot of people may starve and certain parts of the US may become violent. Some places, such as Phoenix and Las Vegas, will literally dry up and blow away over the next one hundred years. The survivors elsewhere will be living in much more traditional environments, though they will be surrounded by many ruins and relics of a former age”.

Very "Mad Max"-ian, isn't it? It's odd to think that twenty or thirty years ago, pundits were prophesizing that cities would be abandoned and turned into prisons, a la "Escape from New York." Now a new generation is claiming the exact opposite--that we'll return to feudalist existences, where many classes of citizens lived together in huge, isolated urban enclaves, with lonely roads and wilderness in between.

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New home construction hits seven-month high. Another take on it, courtesy of Bloomberg. If the boom is continuing in the Midwest, that's where I see a sort of "bubble layering" taking place. The speculators and developers will eat up all the usable land they can to satisfy the insatiable demand for new homes and keep themselves in business. The major housing markets will see price slips and "corrections," as is evidenced by this MarketWatch report, found via the almighty Housing Bubble blog. The big markets are softening, because there's just no land to go around and prices are too high. So developers are pushing inward, building new homes wherever they can and pushing buyers to take advantage. It's not a disconnect, just another sign that a bubble in one market is a flat tire in another. I wonder, though...what do homebuyers really consider when they hear stuff like this? What job markets in the Midwest could support this housing boom, besides, y'know, housing and construction? And will Katrina/Rita reconstruction further the boom's "life support," or put an end to it because of high prices, loss of jobs, and inflationary warnings? The development company at the center of the Kelo vs. New London eminent domain issue has been dumped by New London's city council. No doubt the bad publicity being poured on this small Connecticut hamlet has a lot to do with it. I'd like to think that it also has a small bit to do with the notion that stealing someone's home just to build shopping centers and office complexes is--gasp--wrong. If businesses like the NLDC took all the homes they wanted and built all the offices they wanted, who would be there to work in them? I sure as hell wouldn't fraternize any mall built where my backyard used to be. ;) President Bush has sent in his own tax proposal to the table discussing tax reform. I'm sorry, but this just seems like crap. Eliminating virtually all corporate taxes? Limiting the mortgage deduction? Removing deductions for state and local taxes? Don't be fooled..."simplifying" the tax code is itself code, in this case standing for "We're taking more of your money and investing it for our buddies in 'seeing-eye' trusts and nontaxable offshore accounts in the Caymans." No thank you. This is as dead as Harriet Miers' nomination, only not as funny. ;) Here's a fascinating essay on the decline of modern architecture and how "Peak Oil" may cause the end of civilization as we know it. If you can get through the first five paragraphs of pompous self-aggrandizement and gasbaggery, the conclusions Kunstler comes up with are worth hearing: Yes, a lot of this talk about urban planning and related issues is somewhat academic at this point, in the face of the socio-political tidal wave of the global peak oil crisis coming at us. These days, I often tell audiences that in the decades ahead, the New Urbanism [compact, pedestrian-friendly mixed-use neighbourhoods] will be the Only Urbanism. Suburban development will come to a shockingly abrupt end. The trouble is, we will be a much poorer society and we will not make an easy transition back to traditional living arrangements. The failure of suburbia will have turbulent political ramifications. There will be a fire-sale of distressed properties out there as the value of suburban real estate plummets. There will be a political fight over the table scraps of the 20th century. A lot of people will lose jobs. Vocational niches will disappear. A new social class of economic losers will emerge: the formerly middle class. They will be pissed off about the loss of their ‘entitlement’ to ‘the American Dream’. They will create a lot of political mischief. They may vote for maniacs who promise to make all this trouble magically go away. There will be a tremendous need to produce more food locally, and a lot of trouble making that happen, from the reallocation of land to the technical problems of food production with much-reduced fossil fuel inputs. A lot of people may starve and certain parts of the US may become violent. Some places, such as Phoenix and Las Vegas, will literally dry up and blow away over the next one hundred years. The survivors elsewhere will be living in much more traditional environments, though they will be surrounded by many ruins and relics of a former age”. Very "Mad Max"-ian, isn't it? It's odd to think that twenty or thirty years ago, pundits were prophesizing that cities would be abandoned and turned into prisons, a la "Escape from New York." Now a new generation is claiming the exact opposite--that we'll return to feudalist existences, where many classes of citizens lived together in huge, isolated urban enclaves, with lonely roads and wilderness in between. Guess I better get my tank of gas and rusty armored mask ready to go.