Thinking Citizen Blog — The Vanishing Starter Home — What the Heck Happened? What Is to Be Done?
Thinking Citizen Blog — Tuesday is Economics, Finance, and Business Day
Today’s Topic: The Vanishing Starter Home — What the Heck Happened? What Is to Be Done?
The starter home has been vanishing for quite some time now. Today some excerpts from a recent article in the New York Times by Emily Badger. Experts — please chime in. Correct, elaborate, elucidate.
THE GOOD OLD DAYS — SAY THE 1990s — check out the math
1. “As recently as the 1990s. when Jason Nageli started off, the home-building industry was constructing what real-estate ads would brightly call the “starter home.”
2. “In the Denver area, he wold newly built two-story houses with three bedrooms in 1400 square feet or less. The price: $99,000 to $125,000, or around $200,000 in today’s dollars.”
3. “The house would be in tremendous demand today. But few builders construct anything like it anymore.”
NB: “And you couldn’t buy those Denver area homes built 25 years ago at an entry-level price today, either. They go for half a million dollars.”
“SQUEEZED FROM ALL SIDES” — land prices, construction materials, local community regulations
1. “The affordable end of the market has been squeezed from every side. Land costs have risen steeply in booming parts of the country. Construction materials and government fees have become more expensive.”
2. “And communities nationwide are far more prescriptive today than decades ago about what housing should look like and how big it must be.”
3. “Some ban vinyl siding. Others require two-car garages. Nearly all make it difficult to build the kind of home that would sell for $200,000 today.”
NB: Existing home owners, the bulk of voters, have an interest in rising home prices, and you might say are just acting rationally to restrict supply.
TURN BACK THE CLOCK TO SAY THE 1940s — ARE THINGS THAT DIFFERENT? YES.
1. “Nationwide, the small detached house has all but vanished from new construction.”
2. Only about 8 per cent of new single-family homes today are 1,400 square feet or less.”
3. “In the 1940s…nearly 70 per cent of new homes were that small.”
NB: Do the YIMBYS (yes in my backyard) have a snowball’s chance in hell against the NIMBYS (not in my backyard)? Well, homeownership in the US is 65% (72% among Whites, 43% among Blacks, 51% among Hispanics, 61% among Asian Americans.) Do homeowners have higher or lower turnout rates than renters? Higher. So what’s the outlook for housing supply at the low end?
FOOTNOTE — THE DEMOGRAPHIC PARADOX, FEDERALIST #10
1.) As the typical American family has shrunk, the size of American homes has grown. Living space per person has roughly doubled.
2.) “Those who hold and those who are without property have ever formed distinct interests in society.” James Msdison, Federalist #10
QUOTE OF THE MONTH:
“The single biggest challenge in communication is the illusion that it has taken place.” (William H. Whyte, author of The Organization Man” (1856)
#2 “39 Songs, Prayers, and Poems: the Keys to the Hearts of Seven Billion People” — Adams House Senior Common Room Presentation, 11/17/20
Here is a link to the last four years of posts organized by theme: (including the book on foreign policy)
YOUR TURN — Please share:
a.) the coolest thing you learned this week related to business, economics, finance.
b.) the coolest thing you learned in your life related to business, economics, finance.
c.) anything at all related to business, economics, finance.
d.) anything at all