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The Ramifications of Residential Issues

The housing industry deeply impacts all sectors of the economy. Rental is now the way for many.

By Joel Ross | Updated on June 26, 2011

Housing was not the only thing that took down the markets, but it is one of the main things inhibiting a good recovery. It will be years until the housing market sorts out. That is continued good news for multifamily. For openers, all of the politicians got on the ridiculous band wagon that everyone should own their own home and fulfill the “American dream”. First of all, not everyone has that dream. Second the equilibrium ownership in the US is probably somewhere around 63%-65% in the current economic environment. Third, there is a whole segment of the population who will not care for a home any better if they own or rent. They are just irresponsible slobs, or they will never have the income to properly maintain it. The whole concept that everyone should own a home is political rhetoric and not reality.

The result is we have millions too many houses right now which need to wait until the population growth to population movement catches up. Take Arizona, or Las Vegas or the Inland Empire. Because there is endless land builders foolishly figured there was endless demand and endless mortgages. Nothing is endless other than risk. Land in lousy locations got bought and developed. Commutes got longer for many. Prices went well beyond any intrinsic value. Home builders made excessive profits well beyond anything they ever made before or ever will again. Lending went out of control. Barney Frank covered up for the illegal acts of Franklin Raines at Fanny. Barney also rejected John Snow’s warning in 2002 that Fanny was out of control. Bottom line is we are not going back there.

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