08 March 2008

Homeowner Equity Drops

For the first time ever, American Homeowners owe more than the equity they have on their homes. Additionally, 10% are "upside down", meaning their house is worth less than what they owe.

I have been mulling this housing issue lately, and I have realized something that now seems very obvious. Government subsidy of mortgages, roads and oil helped some poor renters become homeowners and is sold as such to the taxpayer. However, many, many more modest homeowners were also helped. They were subsidized into larger and more distant homes.

Perhaps this housing "crisis" is not going to be short. Maybe it is a sign of some fundamental shift to homes that are more energy and space efficient. In effect it may be the end of sprawl, at least in the form we have known it for the last 50 years. I think this kind of shift is very hard for most people to see or even to believe. But just like the frontier, which has long since disappeared, the bucolic residential suburb has been fully exploited. Long after the frontier was gone, the frontier attitude continued to damage this country.

How long will we hold on to the suburban dream?

4 comments:

justforview said...

I think the line between suburban and urban life is getting pretty blury. We are making urban centers in the suburbs and suburban lifestyle opportunities in the city. This is an interesting thing to watch becuase it resembles a morphing of values and physical places.

This is true even in terms of home ownership. The American Dream to own a home is inherently a suburban one but has become part of the solution for revitalizing urban communities.

Given that homeownership is not always a possibility for some, and given recent developments that it is becoming less so for more and more people, or at least a higher risk, it will be interesting to see how things get sorted out, between city and suburb in this regard.

CityKin said...

I agree. Some of what you are seeing in this city is business leaders imposing their suburban solutions on the problems of the city. Suburbanites cannot conceive that some people want to live without a car or want to rent.

Many people cannot imagine living without a backyard, and altering that preconception is one goal of this blog.

5chw4r7z said...

I get tired of co-workers complaining about gas prices like its a divine right or something, and then they get on me for living downtown, 3 miles from my office.

dave said...

Another interesting dynamic to watch will be what movement the wave of baby boomers make as they transition from their main careers.

How will they resolve economic realities (higher costs of energy) with their independent minded you-can't-tell-me-what-to-do spirit?

I think there will be a mixed approach.

Up here in the hinterlands I'm seeing automotive sector boomers from Detroit relocate to new urban condo projects, suburban-like golf course developments or rural lakeview cottages.