By Kevin M
Ominous question, isn’t it? There are all kinds of implications that go with that possibility, and none of them fit neatly within the economic progression of the past 30-40 years when it seemed the entire economy was running largely on the back of the real estate industry. But whether we like it or not, new trends in housing are beginning to emerge, pointing to a future that will likely see more renters—maybe far more—than in the recent past.
Though new construction of residential real estate has been showing definite signs of an upswing in the past few months, the encouraging statistics are far more important for what they hide.
An article last week, Rent Party! Apartments Drive Strong Housing Starts Data (Yahoo!Finance) reports a good news/bad news scenario on new residential construction. The good news: November housing starts are up 9.3% from October, and 24.3% over October, 2010. That’s an impressive turn-around.
But now the not-so-good news: though overall housing starts are up impressively, the stats for 1-4 family homes is actually down, dropping 1.5% from October, 2011.
So if home building is down from last year, what accounts for the increase in new construction? Apartments! Apartment construction (buildings with five or more housing units) are booming while construction of primarily owner occupied single- and small mutli-family homes are stuck at a recession level pace.
The economic implications of this shift are not lost on builders who are moving from the once reliable single family market to apartment construction. They’re on the front lines of the housing market, they see future, and they’re building to prepare for it. Obviously, they see the shift as part of a longer term trend.
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As if the poor economy, high taxes, too much regulation, advancing technology and globalization weren’t doing enough to torpedo the job market, there’s yet another obstacle to finding a job, one of a more personal nature and it’s having a bigger impact all the time.
Interlocking Traps (Or Why This Recession May Not Be So Temporary)
OOYR Preface: Proper understanding of the big picture is the first, best strategy for preparing and rearranging your life to prosper in the future. In order to prepare effectively for the future—in regard to careers, spending, saving or investing—we must first have a realistic assessment of the situation at hand and where it can reasonably be expected to lead. In the current economic environment, an optimist isn’t one who expects a quick return to the prosperity of yesterday, but rather the person who considers the economy in realistic–though perhaps dismal—terms, and prepares his life, finances and occupation in a proactive manner. The post below, which provides that necessary perspective, is an article written by Charles Hugh Smith at OfTwoMinds.com, and reprinted here by permission. His blog is perhaps the most concise and easy to understand analysis of the state of the economy and the forces driving it as you will find anywhere. Charles is also the author of the e-book Survival+: Structuring Prosperity for Yourself and the Nation. Both the blog and the ebook are highly recommended.
A number of lethal traps hobble structural reforms to the failing Status Quo.
While I often refer here to cycles, trends and feedback loops, there is another class of forces called traps which are self-explanatory: once entered, traps are difficult or impossible to escape due to their inherent (ontological) nature. While all the traps have conceptual elements, each is very much grounded in the real world.
For example: once a nation misallocates its capital into unneeded malls, office towers and exurban housing which now sit vacant and decaying, that capital can never be recovered.
Here are few such traps:
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