From Zero Hedge:
In its schizophrenic manner, the media across the country lamented the housing-starts numbers, which were ugly: 571,000 annualized in August, down 5% from July, down 5.8% from August 2010, and down 75% from its peak of 2.3 million in January 2006. But for the housing market to heal, that number should be near zero for years.
18 million vacant units, that’s the problem. While some people dispute that number, everyone agrees that the inventory of vacant units is huge. Whether it’s 18 million or 12 million doesn’t change the problem. It only changes the duration of the healing process. This is the hangover from the housing bubble when the industry built millions of units for speculators who never had any intention of living there. And now, no one lives there…
Believe it or not, even out here in Las Vegas some new homes continue to be built – and I can’t see why. To be sure, if someone actually came up to a home builder and specifically ordered a new home built, I could see that. But we’re actually arguing right now over whether a developer should be able to start a new, high-end housing development near Red Rock canyon (I’m forthrightly opposed…first off, because we don’t need additional housing in the metropolitan Las Vegas area, secondly because I don’t want to see the Red Rock area marred by another round of cookie cutter houses…and if you do come to visit Las Vegas, do head out to Red Rock; you’ll not be disappointed and its not a long drive…you can even go horseback riding out there). That aside, the article is right – we should be building zero new homes…now and for many years. We’re already glutted…and now that the courts have ok’d it, the banks are about to proceed with another very large round of foreclosures. The problem will get massively worse before it ever gets better.
As for what to do with all the construction workers – my best idea for them is to shift them over to manufacturing, farming and mining…and, of course, whatever related construction will be necessary for an expansion of those industries. We simply do not need houses…not only are we over-built but we’re running out of people to put in the houses, anyways. The Boomers are retiring and, if anything, downsizing their housing…the follow-on generations are much smaller. The idea that housing will be a core component of American wealth creation is over with – it won’t be, not for another 50 years, and even then only if we throttle the Culture of Death and start having children again. There will always be a need for some home construction, of course…houses do deteriorate over time, but we’ll not need as much home construction as before. And perhaps our home builders instead of throwing up cracker box houses can work on building houses designed to last a century with no major repairs? More brick and stone, less drywall and stucco-over-chicken wire? Housing which uses wind and solar to provide some of their own electricity? Houses that dispose of more of their own waste? Maybe houses with bigger lots and built to make a neighborhood look normal rather than manufactured? Just a thought…
A complete re-working of our economy will be necessary in order for full recovery to occur. As I’ve endlessly harped upon – Making, Mining and Growing things. We can’t live on home construction, auto manufacturing will never be as premier as it once was…and the cool, electronic gadgets are nice (and we should strive to lead the world in this area) but they can’t provide the literal tens of millions of jobs we’re going to need. Only getting out there in to factories to make our own mundane items – clothes, tools, etc – and mining our own wealth out of the ground and growing not only our own food, but the world’s food will do it. And in order to get there, we have to re-work our tax and regulatory systems to ensure that those who are willing to make, mine and grow things are left unhindered and, indeed, fostered by government action. And even then, good people, it will be 20 years before American prosperity returns fully.
But, we can do it, if we want…now, do we want to?