05-28-2019, 12:08 PM
(05-28-2019, 10:36 AM)Skabungus Wrote: Why is this news? Why is any of this a question? We've seen this all before. This is the natural progression of real estate though the cycle. See The Appraisal of Real Estate 14th Edition. The cycle is Recovery-Expansion-Hyper Supply-Recession. This happens on a local basis but is also quite visible at the macro level. It is pretty simple the McMansion phase is over. It was over even before 2008 with markets for 3,500- 4,500sf homes tanking starting in 2005. Those paying attention (I get paid to pay attention) saw it coming with books like "The Not So Big House: A Blueprint for the Way We Really Live" (Susanka) Paperback – April 1, 2001 and tons of articles on rethinking America's housing market popping up throughout the early 00's.
The Double-Zero decade was the one in which Sinclair Lewis' Babbitt made sense again after the 1920s. George Babbitt, as we all know, was a real-estate developer who sold people houses that they could not really afford and a loud proponent of Boosterism. The eighty-year cycle necessary for extinguishing the memories of people who lived through the time even as children made the Double Zero decade analogous in many ways to the Roaring Twenties in the celebrity culture, corporate-oriented politics, and bubble economy... culminating in the bursting of the bubble in the analogous panics of 1929 and 2008 -- seventy-nine years apart.
I could see things going very wrong upon reading an article in Business Week in 2005 that detailed the overt fraud in bundling fecal loans that underpinned sales of too much house to people who could never afford them. Criminals in three-piece suits sold those bundles to investors who were going to get burned -- and did. The only question that I had was how long the financial crooks would get away with it. America would have been wise to invest more in plant and equipment so that people would have well-paying jobs in manufacturing and would be able to buy modest little houses in the suburbs. The Double-Zero decade had even more equivalents of George Babbitt selling people houses that they could never afford.
Quote:McMansions decay pretty fast. Most housing stock built in the mid 90's through mid 00's was built with average grade materials to save money and don't hold up well. New housing (that sells to folks other than Boomers) is notably smaller and simpler, with a better quality construction. Note also the advent of the "Tiny House". Though the tiny house idea was birthed to provide a long term solution to housing homeless people, it's become popular and cities throughout the midwest are accommodating (albeit reluctantly) tiny houses in zoning codes. Tiny houses. Houses from 600-900sf in size. Susanka stated waaaay back in 2000 that 1,200sf was probably the ideal size for homes moving into the future, based on earning power and family size. She wasn't wrong.
Bad design? Good for a one-time sale to someone who will never be able to sell the house to someone who wants to buy it except to redevelop the property with its wasteful land use. Poor materials? That will imply faster deterioration, and that the property will be unmarketable even if the architectural plan is solid. I'm guessing that even the plumbing is compromised. Needless to say, infrastructure is compromised to keep costs down. Roads are pie-crust.
The small houses built for returning WWII veterans were built to last the lifetime of an owner and possibly his first offspring. To be sure they may be inadequate by current middle-class standards (try selling a 2-bedroom, one-bath house) -- but they were solid enough that if the owner had to sell for an upgrade in space, he could get something suited to a family with a son and daughter.
Quote:The McMansions will be absorbed into the market and go the way of all housing trends. A few will hang around a long time, but most will disappear in favor of new construction as they age. No worries. Glad to see them go.
Demolition and redevelopment as the property becomes more valuable without the house than with it. As one gets replaced with apartments, the others will face much the same fate. These places are even worse than the 'little boxes' that Malvina Reynolds excoriated:
The permitted expressions of individuality become banal conformity -- commercially profitable, yet awful.
A hint: people who have come from disadvantaged backgrounds to huge money all of a sudden, such as professional athletes and winners of huge lottery payouts often waste huge amounts of money on a 'dream house' that proves a horrible investment. Builders have found ways to sell their dreams profitably to people who have more money than discretion. Thus McMansions.
Quote:What is infinitely more interesting from my perspective is how the new perspective on housing is shaping up. Live-work developments in old office parks and warehouses, intentional communities (hey it's not just for hippies anymore!) and increased interest in urban living have reduced the threats of urban sprawl significantly. All these options reduce the load on community services and utilities quite significantly. Add to that the recent boom in municipal efforts toward solar and wind power and you begin to see an America that is returning to a frugal, utilitarian mindset, at least when it comes to the way people view affording a place to live and work. Nobody these days is asking for a lap pool in their basement.
There is nothing quite like a hard time that steers people into a frugal, communitarian, utilitarian, and modest mindset. Such is the difference between a 3T and a 1T.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.