With big squeeze, homeowners tastes could change

I dunno. The Washington Post is pushing the line that we'll start skimping on our homes now that the market has crashed. Out will be grand entranceways, huge lots and McMansion gingerbread. In will be energy efficiency, tight lots and multi-family dwellings.

The story posits a parallel between the Victorian era, when people erected 30-room mansions, and those homes' subsequent decline into the multi-family/rental market.

Like I said: I dunno.

For the next couple years, the middle class, provided they have jobs, can grab 2,800- to 3,500-square-foot houses for relative pennies in the Tampa suburbs. They're not mansions, but five bedrooms and 3 baths isn't a hole in the ground covered by a couple twigs.

As we've reported in the past, the region has no shortgage of vacant building lots. At last count the four-county Tampa metro area had something on order of 32,000 developed home sites sitting idle.

The Post's story may ring truer in the Washington suburbs, but I don't see a major land shortgage in the Sun Belt, if you exclude much of California.

The Gilded Age ain't over.

 

Comments

[Tino]

James,

I've got to agree with you there, as my plan of beating down sellers finally paid off. It took about 40 different property walk-throughs over 8 months and a half-dozen offers, but someone finally wanted to take my money.

I paid $225/sq ft for a two-story house on a 0.3 acre waterfront lot directly on Tampa Bay. Waterfront houses in the neighborhood are down to asking prices of $300-500/sq ft, which is is still a drop from the peak of $500-1,000/sq ft.

Sellers have to get realistic, though. There is a smaller empty lot two blocks away asking more than twice what I paid (and mine has a house on it), and a similarly-sized house a few doors down on my street for twice as much. No bank will approve financing for a buyer when their appraiser finds out how much this house sold for.

Will prices go down further? Definitely. But I found a price level that I was very comfortable paying and the property is amazing.

Now I'm going to annoy my neighbors by dumping my condo for 25% less than the current lowest priced seller...

[James Thorner]

Excellent, Tino. As your case illustrates, if you can get a great home for a bargain price, who's going to skimp? As Americans we always maximize what we get for our money, and the housing slump will make that possible. Why forgo a grand entranceway - or a salt water lot in your case - when it costs half what it did 3 years ago?

[Grant]

You may be missing the point here. While there will certainly be a period where grand homes can be had for a pittance, longer term we will see a move toward more modest types of housing. Think 10 to 15 year time horizon. The long period of hyper- inflation in America is coming to an end. We will see many sectors (housing, automobiles, home furnishings, etc) return to more reasonabble, if not less lavish levels.

[Brian]

Grant, very rarley have I found anyone that agrees with me on this issue. I too, think that the last 10 years have had very high inflation. IMO, not including housing costs in the CPIwhen MEW becomes easy income to spend, is wrong. The housing bubble created other bubbles in auto prices and college tuition etc.. The deflation we are seeing is a regression to real prices.

[James Thorner]

I don't see a return to low inflation. Quite the opposite. Government intervention - printing money - ultimately increases the cost of everything. Just look at college tuition. The more the government intervenes with Pell grants and guaranteed student loans, the higher colleges raise tuition. It's like the carrot dangled in front of the donkey. You'll never sink your teeth into those supposed savings. Some of the best values in medicine are those procedures not covered by insurance, both private and government. Why? They have to compete on the open market. Do you think a panicky, do-gooder federal government is going to cut off the mortgage gravy train? I think not. People will maximize what they can afford. Don't get me wrong, there are sound reasons for downsizing your homes, not the least of which is the increasing cost of utilities to heat, cool and light your house. But I just don't see a "return to the cities" and all that other stuff the sustainable growth people spout. Inner city people continue to flock to suburbs to escape street crime, urban grime and poor schools. Will cars be more stripped down in the future? I find that hard to believe with all these hybrid/electric/fuel cell ideas being pitched around. I suspect the middle class will continue to splurge on cars, just as the Socialistic Europeans do, while the poor take the bus/subway.

[Brian]

Well this will be the grand Democrat experiment, won't it? Lets be like the socialist Europeans. Isn't that what the liberal/greenies want? Isn't that where the extreme hatred for Bush started? the liberal continentals couldn't stand him (too cowboyish). OK, rant off. IMO, about two years into this socialist economic/cultural change the Dem's will force on us, europe will fall apart financially (hyper-inflation will begin there first) and there will be a collective American gasp of horror.

[Brian]

James your point re: tuitions is true. However, it started 10 years ago with the runnup in house prices. Tuitions were mostly financed with MEW. That's why I believe the CPI was about half of what it should have been. In reality, we have had an avg. of 6-8% inflation for the last decade. Wages never went up, but (un?)real personal wealth did. MEW allowed it all to happen. Wages were kept down from globalization. W/O MEW and wage increases I don't see how the economy can bottom and then recover w/o lower prices.

[dunno]

Thorner finally made a truthful statement, admitting and repeating that "I dunno". What a stunning admission.
That pretty much sums up his real estate expertise.
Finally some redeeming integrity in journalism.

[Brian]

Dunno, please post again when you have something worthwhile to say. It's a very interesting and intelligent blog. You add nothing.