Boom in the Doom

[dbarberic]

Re: Boom in the Doom

A 25+ page E-book sold on Amazon for under $10?

I can't tell if your sarcastic or not.

I'm thinking bigger. More like a general contractor that sells retrofits at a fixed price levels where a team comes in and does everything at one.

May work in the future if the federal government starts offering tax incentives to perform energy efficent home improvements.

[Verrocchio]

Re: Boom in the Doom

Leinberger did tend to stretch his case a bit. To support his point that today's houses are poorly made, elsewhere in his article he wrote that the drywall is about all that's holding up the wooden frame in these houses. Having worked on a framing crew on summer "vacations" while in college, I'd say that is a fair description of some stick-built houses, but it all depends on the quality of the design, the contractor, the subs, and the workmanship; so, YMMV.

You're right, too, about cycles. Preferences for urban, suburban, or rural living are fickle, and trends go up and down. Still, his thesis lies within the realm of probability. In times like these, when major assumptions have been shown to be false, speculation about the future flourishes.

[bart]

Re: Boom in the Doom

I sniff a business opportunity to retro-fit the existing housing stock for energy efficiency with the latest, best practice technology.

Hmmm... how can this work?

A 25+ page E-book sold on Amazon for under $10?

[dbarberic]

Re: Boom in the Doom

I sniff a business opportunity to retro-fit the existing housing stock for energy efficiency with the latest, best practice technology.

Hmmm... how can this work?

[c1ue]

Re: Boom in the Doom

GRG,

I don't see the suburbs getting depopulated; there are always those people who want big spreads and are willing to drive 30 miles to get it.

However, I equally don't see prices holding up.

Between the costs of maintenance, heating/cooling, and commuting, I'd estimate 50%+ price drops to maintain attractiveness.

As for Bakersfield for students - actually I disagree.

I'm seeing a gigantic surge in academy here in SF: weather isn't the greatest, but far better than month-long 100 degree spells in Bakersfield.

Just the Academy of Art alone has expanded to 3 different locations within a 10 block radius of my place.

Furthermore from a social/creative/propaganda perspective, you can trivially beat Bakersfield (I spent some formative years in the Central Valley). There is no coincidence that alcohol is the principal entertainment vehicle there.

[GRG55]

Re: Boom in the Doom

...I'm comparing the economic value of homes left over from the housing bubble to the economic value of fiber-optic cable left over from the telco bubble. The latter enables all kinds of economic activity, much as a road does, provided it isn't a road to nowhere. You can argue that a house does, too, but not if it's half finished, or abandoned and need of repair before it can be used, and is likely to stay abandoned because it is too far from areas of job growth. A house has only one use – to house people, who may or may have no economic reason for being where the house is. That's why Bakersfield came to mind. It only exists because the housing bubble made houses too expensive in suburban LA. As the housing in LA gets cheaper, guess what happens to the abandoned houses in Bakersfield?

Given the relative difference in economic value between housing and other capital investment, does it follow then that the so-called gargantuan housing bubble wasn't (in real economic value terms) nearly as "big" as it has been made out to be?

If so, then perhaps the "next bubble" doesn't need to be nearly as "big" as we have assumed, in order to be enough to sufficiently offset the negatives of the housing bubble collapse and keep the wheels on the wagon?

[FRED]

Re: Boom in the Doom

means +

This has GOT to be related to the inflation/deflation debate. But I don't know how!


= +

[bart]

Re: Boom in the Doom

means +

Your choice:
http://www.nowandfutures.com/grins/rimshot.mp3
or
http://www.nowandfutures.com/grins/eat_short.mp3



(by the way, my post was based on a misunderstanding)

[metalman]

Re: Boom in the Doom

Oh please... cut the crap.

means +

[EJ]

Re: Boom in the Doom

Contrary to EJ's pessimism, Bakersfield could do just fine. It's a large distribution and processing center for one of the biggest food growing regions in the world. Believe it or not we get huge amounts of fruits and vegetables here in the Arabian Gulf that are labelled from Bakersfield growers (plums, apricots, baby carrots, and so forth). As the US $ has declined I notice that US sourced food seems to be displacing stuff we used to get from South Africa and Australia.

If you believe the talk about an agricultural boom, Bakersfield may surprise us all - as long the water doesn't run out that is...:cool:

I Bakersfield!

[GRG55]

Re: Boom in the Doom

Are places such as Bakersfield going to be abondanded similar to some of the old factory cities and towns in the midwest?

How many Bakersfields are there in the U.S.? I've traveled a little bit, but not that much.

Contrary to EJ's pessimism, Bakersfield could do just fine. It's a large distribution and processing center for one of the biggest food growing regions in the world. Believe it or not we get huge amounts of fruits and vegetables here in the Arabian Gulf that are labelled from Bakersfield growers (plums, apricots, baby carrots, and so forth). As the US $ has declined I notice that US sourced food seems to be displacing stuff we used to get from South Africa and Australia.

If you believe the talk about an agricultural boom, Bakersfield may surprise us all - as long the water doesn't run out that is...:cool:

[GRG55]

Re: Boom in the Doom

American housing stock may have more to contend with than foreclosures.

In an article in the March 08 Atlantic Monthly, The Next Slum, Christopher Leinberger describes a major structural change in the housing market, a reversal of the decades-old flight to the suburbs. His article is based in large part on the analysis of Arthur Nelson, who forecasts a surplus of 22 million large-lot homes by 2025.

Babbitd, Leinberger reports that 81 of 132 houses are in foreclosure in Windy Ridge, seven miles northwest of Charlotte, NC; and the Franklin Reserve neighborhood in Elk Grove, CA, has many empty homes. Graffiti and broken windows have multiplied there.

GRG55, Leinberger doesn't think that your "grossly overbuilt inventories" will hold up well, because even the "high end McMansions" are cheaply built, as compared to the tough rowhouses built in the cities at the turn of the (previous) century.

I've seen my fill of the British equivalent of Leinberger's "tough row houses". Structures are fine, but try living in one (that hasn't been totally gutted and completely rebuilt using modern glazing, plumbing, electrical, insulation, HVAC, fixtures, the works) before one falls for the romanticism that Leinberger promulgates.

There's always going to be cycles of rebuilding and rejuvenation in the cities, and there will always be a good number of people that prefer inner city living to the suburbs. For my last 12 years before I left Canada I lived within walking distance of my downtown office, and my flat was in Central London, so I understand the attraction. But there are serious trade-offs.

For example, most inner city rowhouses/townhouses involve lots of stairs. An aging population of Boomer retirees doesn't mesh well with that situation (I am dealing with this problem right now with my in-laws). Of course an aging population of Boomer retirees probably won't want to be rattling around in oversized McMansions either. Fair point. But my point is that most of the new housing in the last 15 or 20 years wasn't McMansions, and most of it wasn't in undesirable locations either. But it's these horror stories that make the headlines and the evening news on TV, and leave people with the incorrect impression that all construction was crappy, all new homes were oversized, all of them are in places that are depopulating right before our very eyes (that seems to be Leinberger's angle), and "nothing will ever be the same again".

I witnessed first-hand, up close, the melt down in housing when the last resource boom went bust (anyone in Houston at that time will remember it well). Where I was median home prices fell more than 25% between 1981 and January 1986, when they finally bottomed. There was a lot of doom and gloom on housing, the "death of the suburbs", the "end of commuter towns", "real estate will never recover", "the sky is falling", etc. being passed around then too. Didn't happen. Short of another Great Depression it won't happen this time either.

[GRG55]

Re: Boom in the Doom

EJ writes in:

No argument. Modern houses are better, cars are better, bicycles are better, medical care is better, and on and on. Visiting a museum and living in one are two entirely different experiences. Whenever I visit the kinds of flats you're talking about I'm reminded that those who complain about how the dollar has losing 95% of its purchasing power over the past 60 years are losing sight of how much our standard and quality of living has improved, romantic ideas of rustic living aside. You may need $10 to buy a lunch that cost $0.25 during the 1930s but you can buy with a few month's salary a car that $1,000,000 would not buy 20 years ago.

In my original projection of the housing bust from Dec. 2005 I figured MacMansions were destined to be divided up into multifamily dwellings. I have no idea what might happen to improve the picture in Bakersfield. Maybe if oil prices rise to $200 there's something under the ground there that will help? I recall an oil pump or two in the area.

One possible outcome is Bakersfield becomes a college town. The McMansions go multi-tenant, and students sensitive to the tuition and living costs in the Bay Area & LA head inland. Let's face it, students are not only acutely price sensitive, but can put up with anything for 4 years. Besides they don't have to spend the gawdawful summers there. I've driven by a large campus that I think is a Cal State U outpost there. Okay, okay, it's not Amherst, but it might work.;)

There's always a solution...

[Verrocchio]

Re: Boom in the Doom

American housing stock may have more to contend with than foreclosures.

In an article in the March 08 Atlantic Monthly, The Next Slum, Christopher Leinberger describes a major structural change in the housing market, a reversal of the decades-old flight to the suburbs. His article is based in large part on the analysis of Arthur Nelson, who forecasts a surplus of 22 million large-lot homes by 2025.

Babbitd, Leinberger reports that 81 of 132 houses are in foreclosure in Windy Ridge, seven miles northwest of Charlotte, NC; and the Franklin Reserve neighborhood in Elk Grove, CA, has many empty homes. Graffiti and broken windows have multiplied there.

GRG55, Leinberger doesn't think that your "grossly overbuilt inventories" will hold up well, because even the "high end McMansions" are cheaply built, as compared to the tough rowhouses built in the cities at the turn of the (previous) century.

[Slimprofits]

Re: Boom in the Doom

Are places such as Bakersfield going to be abondanded similar to some of the old factory cities and towns in the midwest?

How many Bakersfields are there in the U.S.? I've traveled a little bit, but not that much.