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Too many houses, too few people to fill 'em
October 17, 2008 - Let's distill the housing crisis down to its barest essence: The
United States built millions more homes than there were families to fill them.
Economists have dubbed this surplus the housing "overhang." And we in Florida —
forgive the pun — have one of the nation's worst hangovers.
Statistical confirmation comes from the census. Among major metros, the Tampa
Bay area ranked second in home vacancies in 2007 at 5.1 percent, almost triple the
empty homes just two years earlier. Orlando was tops at 7.4 percent. Don't look for
2008 to bring any improvement.
Need more proof? Two years after Tampa builders started applying the brakes, we've
still got about 35,000 homes, new and used, jamming the "For Sale" listings. That
number has been almost impervious to improvement, thanks in part to all the
foreclosures feeding the glut.
It wasn't so much that the building industry miscalculated the nation's housing
needs. It was that investor-purchasers, buoyed by cheap money, intervened to
distort the market. But if your population fails to spin off sufficient new households,
who's going to relieve investors of their poorly timed purchases?
Ridding ourselves of this housing overhang has grown increasingly problematic.
This is the year the first big wave of baby boomers — those turning 62 — are
retiring. Florida expected to lure a portion of them from their wintry hovels.
Unfortunately, these boomers' departure from the work world coincided with a
recession, credit crunch and stock market meltdown. Not exactly prime time to up
and relocate to the sunny strands of St. Petersburg.
Home prices probably won't rise substantially for another two or three years. It's
part of our continuing penance for overindulging in 2005.
The real estate market will be ready to catch the next wave of boomer retirees in
2011, when they start turning 65.
Maybe this time around we'll build houses people actually need.