Thanks for this post. i was interested in both topics.
On credit risk, there's also the consumer debt sector: credit cards and auto loans. That's also a key risk.
On kids, my wife and I were 8-12 in NYC from 1970 to 1974. We were given much more freedom than gave our three kids who were 8-12 from 1996 to 2005 (six year age spread). NYC was definitely safer for our kids than for us.
We have a one year old grandson and it'll be interesting to see what freedom he'll be given.
I think there is too much focus on lack of existing homes for sale for several reasons:
1. Baby boomers are entering retirement. Unless they are looking to move to a new area for retirement, they are not in a rush to sell their home. A 65 year old with decent income and assets will likely live into their 80s or more. The model from 40 years ago where they die of lung cancer at 70 and their home goes on the market isn't the baseline anymore. Many of these houses won't come on the market for a decade or more.
2. Median new homes have been increasing in square footage every decade for the past 60 years. The cost to build a home is till based on square footage and the lot size is usually bigger. So the median new home and median home size is getting more expensive which makes it less affordable regardless of any other factor. The solution is to build more 1,000 sf - 2,000 sf homes on smaller lots. That works in any financial environment but is generally less profitable for homebuilders in tract housing.
3. There are a lot of lots in cities but they are not in desirable neighborhoods, the end product of decades of urban decay from redlining etc. Many of the homes from before mid-80s have lead pipe and lead paint making them a hazard and less desirable housing in many ways. Many of these are smaller homes on smaller lots, so would be affordable. A strategy to rejuvenate these areas with new housing would open up a tremendous amount of affordable housing.
4. There hasn't been a lot of home construction since the housing crash in mid-2000s. That is 15 years now. Zoning laws, HOAs, etc. make new housing of all types more difficult to build. That needs to get fixed so that the people who currently live in an area can't block all affordable housing construction. Everybody recognizes that lots of new affordable housing needs to be built as long as it is built in somebody else's community. Lots of new housing was being built in the 80s and 90s with interest rates and inflation higher than today. But they used up much of the easy land to build on. Now it is more difficult doing infill housing in areas with established communities that like status quo.
Thanks for this post. i was interested in both topics.
On credit risk, there's also the consumer debt sector: credit cards and auto loans. That's also a key risk.
On kids, my wife and I were 8-12 in NYC from 1970 to 1974. We were given much more freedom than gave our three kids who were 8-12 from 1996 to 2005 (six year age spread). NYC was definitely safer for our kids than for us.
We have a one year old grandson and it'll be interesting to see what freedom he'll be given.
I think there is too much focus on lack of existing homes for sale for several reasons:
1. Baby boomers are entering retirement. Unless they are looking to move to a new area for retirement, they are not in a rush to sell their home. A 65 year old with decent income and assets will likely live into their 80s or more. The model from 40 years ago where they die of lung cancer at 70 and their home goes on the market isn't the baseline anymore. Many of these houses won't come on the market for a decade or more.
2. Median new homes have been increasing in square footage every decade for the past 60 years. The cost to build a home is till based on square footage and the lot size is usually bigger. So the median new home and median home size is getting more expensive which makes it less affordable regardless of any other factor. The solution is to build more 1,000 sf - 2,000 sf homes on smaller lots. That works in any financial environment but is generally less profitable for homebuilders in tract housing.
3. There are a lot of lots in cities but they are not in desirable neighborhoods, the end product of decades of urban decay from redlining etc. Many of the homes from before mid-80s have lead pipe and lead paint making them a hazard and less desirable housing in many ways. Many of these are smaller homes on smaller lots, so would be affordable. A strategy to rejuvenate these areas with new housing would open up a tremendous amount of affordable housing.
4. There hasn't been a lot of home construction since the housing crash in mid-2000s. That is 15 years now. Zoning laws, HOAs, etc. make new housing of all types more difficult to build. That needs to get fixed so that the people who currently live in an area can't block all affordable housing construction. Everybody recognizes that lots of new affordable housing needs to be built as long as it is built in somebody else's community. Lots of new housing was being built in the 80s and 90s with interest rates and inflation higher than today. But they used up much of the easy land to build on. Now it is more difficult doing infill housing in areas with established communities that like status quo.