The news rolling out this week that housing prices have taken a two-year dive stirs up a new wave of public discussion of the housing crisis. NPR ( http://www.npr.org/blogs/thetwo-way/2011/05/31/136815778/home-prices-at-new-recession-low ) and just about every serious news outlet has reported the S&P/Case-Shiller news that housing prices nationally have dropped to levels below what had previously been accepted as the market’s “bottom.”
New York times reporter David Streitfeld added that home ownership may no longer be a keystone of the American Dream. He quotes the CEO of housing website Trulia, “The emotional scars left by the collapse are changing the American psyche.”
To the degree that’s true, it’s no wonder. We turned real estate value into vapor, allowing our bankers to sell faith that houses are always worth more every year. They sold loans like used cars. Then they sold them again.
But there’s another problem, too: and a simpler one. The problem is that we have devalued our market by creating a supply of houses that far oustrips demand. We let the construction industry build as many homes as it can finance. Doesn’t matter how many people there are—only if the builder and the banks that finance him believe it can sell.
So now we’ve built too much. And for a long time in Northeast Ohio, demand has been shrinking.
A couple months ago CNN cited the census to note that more than 11 percent of houses nationwide are vacant: http://money.cnn.com/2011/03/28/real_estate/us_housing_vacancy_rates/index.htm
We’ve simply built far more than we need. As I reported a few years ago http://www.clevescene.com/cleveland/unnatural-resources/Content?oid=1521317 Cleveland has four times as many abandoned houses as it has homeless people. ( There are by now well over 15,000 abandoned properties in the city—houses no one wants or will take responsibility for, simply awaiting the wrecking ball. There are, according to the Northeast Ohio Coalition for the Homeless, about 4,000 homeless people in the city. You could give each of those people a house, and still have three houses for every homeless person left over).
We’ve built too much, and we haven’t cleaned up after ourselves. Now house litter the landscape like fast food packaging—our waste, big piles of it, up and down the street.
Cleveland dot com reports that the vacancy rate across Cuyahoga County is 12.3 percent, almost a full point higher than the national average. In Cleveland itself, the rate is 19.3 percent. Almost one house in five.
We need to clean up after ourselves. What we need to do, is to give humans the same kind of respect we give ducks. What I mean is that we need to look after the environment we live in. For years, federal and state wetland mitigation legislation has required that if someone wants to build something that would ruin or eliminate a wetland, they have to do penance by restoring a wetland someplace else.
Why don’t we enforce some similar requirement on housing construction? An acre for an acre. Sure: You can build a house on farmland in a market that has longterm declining demand. But to do so, you’ve got to remediate equal acreage, cleaning up the same amount of waste property somewhere else. Once a developer had remediated his brownfield acreage, it might become attractive to build right there, rather than go to the additional expense of acquiring greenfield somewhere else.
If that’s too expensive for the housing industry, tough. We’ve got way more houses than we need. Way more than we’ve proven willing to maintain. We’ve got to stop giving the industry a pass because we hope it will create some jobs. Using the housing industry to drive the economy means we live in our own waste. Why do we put up with this?
If we can protect the places where ducks live, why can’t we do it for humans?