The coming housing calamity (Robert Steuteville, New Urban Network) [View All]

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http://newurbannetwork.com/news-opinion/blogs/robert-steuteville/14620/coming-housing-calamity

The building industry is in deep depression, with housing starts at their lowest levels since data have been kept during the past half-century. Pulte Homes, one of the nation’s largest builders, reported losses of more than a billion dollars for 2010. Signs of a turnaround for the industry, one of the primary engines of growth for the US economy for two or three generations, have been sought since 2009 but are always over the horizon.

Arthur C. Nelson, one of the nation’s most prescient housing market researchers, says the worst is yet to come. The industry faces demographic and economic forces that will apply unrelenting downward pressure on the market for the next decade, Nelson told a group of journalists at the Lincoln Institute of Land Policy in Cambridge, Massachusetts. He called his presentation “The Decade of Calamity.”

Nelson, professor of city and regional planning at the University of Utah, reported prior to the housing crash that the US faced a massive oversupply of large-lot single family houses and an undersupply of multifamily units — and he warned that Fannie Mae and Freddie Mac would confront deep troubles. All of these views have held up — one reason why Nelson has credibility now. The other reason is that Nelson’s views are based on solid research — some presented for the first time at the symposium in mid-April.

Holding the current demographics constant — that is to say, isolating and examining the change in the populace between 2010 and 2020 — reveals much about the demand for new housing. Ninety percent of the increase will be households without children, and 47 percent will be senior citizens (the latter resulting from the rising tide of Baby Boomers who started turning 65 last year).

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