Yesterday’s Austin Statesman quoted a local economist who said that construction will pick up in the next two years due to “pent up demand”. I thought that was an interesting contrast to the following ad in yesterday’s Austin Craigslist:
The bank took away our houses and now we’ve combined households to move into a house 1/3 the size. That means a LOT of stuff that has to be sold or we’ll have to walk away from it. For example, we have:
The ad goes on to list many expensive goods such as “antiques” and “original art”. This was not a subprime loan.
Yes, the Craigslist ad is only one data point. It is one more data point however, than the data provided by the Statesman. Too often “real world” evidence such as this is passed over in favor of unsubstantiated, hopeful projections.
When the economy improves and jobs are once again plentiful, certainly families like this will be anxious to once again have their own homes and more spacious quarters. Until that happens however, the trend will be “downsizing and combining”, not “pent up demand”.
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Real estate listings in Craigslist could also use some new advertising descriptors besides ‘cute’ and ‘cozy’. How about ‘still has that new house smell’ or ‘move out ready’?
Yes, it is all about HOUSEHOLD FORMATIONS. That figure has been negative for some time, and although it will likely improve as the economy improves, there are some fundamental economic shifts that have taken place. Basically the distribution of income, and the disconnect in housing starts. Most of the housing built in the past 10 years has been middle to upper middle class, and what is needed is working-class houses – back to the small bungao? Also as we have read time and time again, the working class has less income, and the rich have more. Perhaps if those developers are building mansions they will do well. MarketWatch had a piece on Thursday that 2 million dollar houses in San Francisco and Silicon Valley are flying off the shelves.
Mark-
I do take those “flying off the shelf” articles with a grain of salt. Certainly in the Phoenix area, every time we see one of those, L checks the data for me and the data doesn’t match the hype. Yes, there is a greater disparity between the rich and the poor, but there are also fewer rich folks these days, which tends to hurt the upper end of the market.