According to the Commerce Department as reported on NPR today, new-home construction fell over 10% in the last two years. NPR wasted no time declaring one simple fact, no new homes = bad news.
“Remarkably,” says David Crowe (chief economist at the National Association of Homebuilders), “although our population expanded four-fold since the ’40s, we aren’t building any more new homes than we were in the ’40s.” And that’s bad news for the whole economy. At the end of most recessions, Crowe explains, housing picks up and usually gives the economy a boost.
This is the traditional view (plus what do you expect from the nation’s advocate for home builders). The traditional view is wrong. It’s wrong and it’s bad for America. There is no reason to build more houses. We have too many houses as it is. We need to move away from tying the American economy (and the American dream) to building your own home. The dream is owning a home. Homes exist. Buy one. That’s the dream. Now, I have other opinions on how we need to scale back that version of the American dream as well. But for purposes of today’s story on NPR, let’s take this American dream thing one step at a time.
Back to my original point – the traditional view is wrong. I do not think that our failure to build 1 million homes a year should be indicative of the health of the economy. Perhaps in years past, that was true. Today, our generation is buying houses later or not buying them at all. We seem to be more urban than our parents and not adverse to renting longer (or indefinitely). I think that in a culture that is recycling, reusing and repurposing all sorts of things; we should be comfortable thinking about housing the same way. Why build?
My parents built our house when I was three years old and that home has played an enormous role in our lives and in the lives of friends, family and neighbors. It’s a wonderful and amazing place. I’m not sure if it was my parent’s dream home, but it certainly is the stuff dreams are made of. In fact, I can’t imagine our lives any other way. At the same time, my wife and I do not have the same dream. We dream about an old house and not just an older house, but a really old house. Granted, that’s just us. But I think I’m struggling to articulate a shift in thoughts on home ownership and new home building.
I was disappointed that NPR did not look into this, explore it and/or research it. NPR took the position that the whole economy could not be restoring as quickly as we thought if we’re not building new houses. No mention that a smaller pool of home buyers is not automatically a bad thing. We’ve got all the houses that we built throughout the Boomers’ lives and we have fewer people in our generation as well (I think?). Let’s fill up the houses we’ve got before we worry about building 1 million more next year.
I do not claim to be an economist or a sociologist, but how sure are we that this trend is a bad thing? I agree that we want to promote home ownership just not home construction. And there is a downside. Without home-building we do lose the spending on related products like window blinds, throw rugs and comforters. Even still, I do not think this trend is necessarily indicative of a devastated economy. Instead, I see it as an important convergence of two facts – the mortgage industry is still correcting and young families might not have the same priorities (such as building a new home) as previous generations. Not only am I not worried, I think its healthy. I think its healthy to rethink how we conceive of the American Dream and how approach home ownership (including new home building).
Why not look to the auto industry for a comparison? Just as we realized, the hard way, that the American auto industry’s business model and technology were unsustainable. Detroit reinvented itself and Chrysler and Ford are on the way back with a fresh approach. It took a humbling collapse and Presidential reprimand for a major reorganization in the industry. Likewise, we might be seeing the same in the housing industry. Except the reorganization that I’m envisioning is consumer-driven and not yet imagined by traditional outposts (in this case, the Commerce Department and NPR.)
Our generation wants stability, no doubt. But I don’t think that we associated stability with the traditional sources like marriage, kids and a house with a white-picket fence. I know this sounds a bit odd from the guy who got married at 24 years old and talks about buying a 200 year old house in New England. Seems pretty traditional. But I don’t feel that those decisions are driven by a desire to play by the rules or achieve these traditional milestones. Instead, I feel that my friends and I simply explore opportunity in a world that’s much more collaborative and digital than ever before. We do not depend on a physical community in the same way our parents did. Our community has expanded. Urban lifestyles in Boulder, Portland, Silver Lake and Seattle offer the best of urban and rural life (should Brooklyn get a shout out here too?). We don’t need a house in the suburbs anymore.
Now, I’ve definitely crossed the line into David Brooks (and Bradford Frost) territory. So, am I making too big a deal out of this housing trend and NPR’s typical and out-of-date reaction to it? Or is there a shift happening in the under-40 set that traditional economists and journalists haven’t realized? I know I haven’t done a great job articulating my idea or “the shift” very well in this post but I hope that I at least brought up some interesting questions. I think it’s time to start looking creatively at “traditional” trends and questioning not only whether we really believe in those trends but also whether we should be following old models.