American Housing. The Bird On A Wire In 2015,
2017 And Beyond.
The housing outlook for the second half of the year is all about affordability—for buying and renting. How bad will it get, and how much will it hurt the recovery in home sales?
Home prices are still rising, but at a slower pace than this time last year. That cannot be said of mortgage rates, which are now on a straight trajectory up. The short supply of homes for sale shows little sign of improving, though, which is keeping prices high. At some point, however, higher mortgage rates will hit affordability and could trump that short supply in taking the heat out of home prices.
Read more here.
Sales of existing U.S. homes rose to the highest level in eight years, according to the National Association of Realtors, but that may be the peak for the year. One real estate brokerage claims consumer demand for housing took a sharp turn for the worse in June, as potential buyers balked at higher home prices.
Read more here.
The Bird On A Wire In 2015, 2017 and Beyond.
Here’s the thing, the American housing industry has been in a steady state of economic decline since the moment people like Carlton Sheets started telling Americans how easy it was to “flip homes” and companies like Home Depot and Menard’s started selling everything including the kitchen sink under one roof with the thinking that the homeowner could somehow do a better job of renovation than a professional who had several decades of multidimensional industrial based construction experience behind him. As the combined effect of both of these two terribly self absorbed and structurally ill conceived ventures has today more or less turned the building trades into something that can be found on either an orange or green powder coated steel industrial shelving system most likely manufactured from steel made in a foreign country and packaged in yet another, once the packaging is opened, out jumps yet another attempt to impress Americans that the value of their home will continue to increase just as long as they continue to purchase as many useless home improvement gadgets stores like Home Depot and Menard’s continue to hack as the ultimate opportunity to once again increase the already absurdly over inflated price of the home to begin with.
As this vicious cycle has clearly not amounted to anything even remotely related to increased valuation of any form of private real estate property, it has done even less for the overall continued increase of property values in entire neighborhoods as it has done still less in the growth of high skilled and high tech construction related fields that in fact once thrived in those neighborhoods. In fact, as the American home has essentially been used by every Realtor, every banker, every tax assessor and every politician for the net financial gain of everything but the home and the homeowner, suggesting even for a minute that things will somehow change for the better in the latter half of 2015 belies entirely the fact nothing in fact will change because in fact nothing possibly can change.
Just a few days ago I was asked by the owner of a home located on West Wrightwood Avenue in Chicago to give him some sort of an assessed value for the house he had recently purchased as an investment property. As he is one of those people who inadvertently got caught up in the purchase of highly overvalued and hence foreclosed upon Chicago housing back in about 2010, now in 2014, he is being forced to assess whether or not in his opportunistic 2010 mindset, he may have been just a bit short sighted. With the now gutted house unveiling a broad host of problems that had been hidden from sight by years of home improvements done by nitwit homeowners, what he is seeing are problems that in essence have something to do with the overall integrity of the house he purchased, but much more so have much more to do with the overall poor quality of the municipal infrastructure that years ago began failing to serve the basic utilitarian needs of the house and the neighborhood the house resides in.
With the hopes of doing basic improvements to make the house “rent able”, he is on one hand, faced now with only one alternative, renting to those who like everyone else in this renters neighborhood exist on but paltry and insecure present and future wage growth potential. As a simple look down the street in either direction unveils a collection of privately owned automobiles that are on average 15 years of age, needless to say the garages that are supposed to house these cars are several decades older and that much the worse for wear. On the other hand, if he were to go a bit farther and upgrade the house to fit the needs of an upgraded tenant or possible private homeowner, his risk of failure rises exponentially. With upgrading comes the cost of additional material and considerable labor increases which in turn comes with the realization that one cannot squeeze a diamond into a pile of coal dust and expect anything more than more dusty coal. As this obvious reality is in fact a nationwide reality, the only real answer I can give this poor guy is to pray. As he can’t afford me to do the job right, and, I will not work for wages that place me into the same income bracket as the other renters in this socially, environmentally and industrially useless and economically valueless Chicago neighborhood, both he and his brilliant real estate strategy are about to become the second stage of America’s burst housing bubble.
With the onset of each bubble burst over the course of the last several decades, every Realtor, every banker, every tax assessor and every politician seeking net financial gain along with the self absorbed purchaser of the home on West Wrightwood Avenue in Chicago are left with a variety of not so tasty economic scenarios. With the first being simply giving up, shutting off the lights and walking away from the whole mess, such a scenario seems to be somewhat at odds with the basic premise of human survival as well as the much more evolved premise of human ingenuity. Yet before human ingenuity can indeed be addressed, the flaws of useless economic policy must be identified, reworked and rewoven into the whole concept of home ownership. As that home can only be defined as an abstract part of a whole and thriving mechanism, if in fact the home is not defined as such and instead is left entirely to its own making, it of course will die.
Whereas this scenario is of course manifested throughout the Chicago land area, perhaps no where can it be witnessed in such an obviously compelling manner than in rural parts of Illinois where after driving for several miles and seeing freshly painted farm houses, one will happen upon one that is grayed, withered and quite literally disappearing into the land that once provided the inhabitants of that home with both the nutritional and industrial based economic sustenance the family of course truly needed and once worked quite hard to achieve. When we take that rural portrait back into the city and try to place it into the context of an entire neighborhood beset with urban decay, somehow or another, the whole thing going on in rural Illinois seems almost entirely detached from what in fact is going on in neighborhood Illinois. Of course, it is not, and, of course, it is one in the same as both portraits represent the entire departure of a human culture from its own very simple and truly organic based industrial and economic roots.
If you can picture yourself pulling off a rural road and stopping in front of that abandoned Illinois farm house, you most likely can as well, picture yourself getting out of that car, walking across the acreage of once thriving farm land in front of that house and in doing so arriving on what once was most assuredly a beautiful covered front porch very much replete with an old wooden porch swing for two. Whereas the front porch swing has long since collapsed and the porch itself begs forgiveness as you cautiously sit, once settled, what you hear is profound silence while what you see visually magically interacts with what you imagine viscerally, all of which seems much easier to experience emotionally here in rural Illinois than it would be in urban Illinois. None the less, as you are sitting there you begin to notice things about that farm house that are oddly similar to the urban house on West Wrightwood Avenue.
The first thing you notice is the barn, and, the fact that the large rolling door to the entrance long ago rolled off the track only to reveal an oddball assortment of old cars, farm trucks and machinery that pretty much did the same thing. Then of course you notice the old fuel tank perched six feet off the ground, rusted and more than likely filled with a substance that was once capable of powering the equipment found in the barn. Turning your head in another direction, you notice an old hand operated water pump mounted atop a wooden platform that obviously covered the well pit beneath the pump. As the pit most likely had some water left in it, from the aroma wafting across the yard to the front porch where you were sitting, chances are it was as about as fresh as the fuel was in the tank next to the barn. Turning your head in yet another direction you spy what appears to be an old cistern that more than likely held rainwater that fell from the roof and was used to irrigate the vegetable and flower beds that had long since gone to seed around the perimeter of the house. Yes, in as much as the silence of the old country farmstead revealed memories of a time when life on that farm was indeed both simple and productive, sudden images of that same simplicity and that same productivity began to flash through your brain about the memories of the home on West Wrightwood Avenue in Chicago as well.
But as 21st century irony is perhaps the greatest irony plaguing every Realtor, every banker, every tax assessor and every politician, the net financial gain of everything but the home and the homeowner can unfortunately be summed up by the rotten fuel, the rotten water and the rotten vessels held over from the 19th century that has all but collapsed the economic momentum of the 21st century in both the urban and rural portrait of what indeed basic infrastructure actually is. In other words, until the definition of 21st century infrastructure is understood, the definition of home valuation won’t be either. Until the American home is intricately tied to all aspects of that infrastructure, home valuation will remain every bit as putrid as the smells coming from that rural farm house or urban mold infested residential basement.
So, what actually is 21st century infrastructure? It is a fully functional, multidimensional, mixed energy based industrial mechanism with as many moving economic parts needed to insure there are no more old and obsolete motor vehicles being parked on urban streets or rusting away in decaying rural barn yards.
Think about this for a moment.
If we got rid of every single automobile that is either not operational at all or is so inoperative it is, at best, only used by someone to get to a minimum wage job at a place that demands of that individual that he or she drive that useless vehicle to get to that job, why continue to invest any form of energy into such vehicles? As for all practical purposes all forms of energy currently being used to keep that vehicle around have been entirely expended, if the vehicle is entirely decommissioned, won’t all of the other entities that are equally as useless also be decommissioned in the process, including that minimum wage job?
Well, think about this for a moment.
If in fact this essay is about why the housing industry has completely stalled out across all of America, and in fact, this essay is also about the need to create entirely new parameter sets that will help us to both define and build new 21st century infrastructure models, most likely, it would be beneficial in the process to identify what in fact were the causes of the infrastructure collapse in the first place. Thus, as aging and energy wasting vehicles are one of the causes and companies that offer nothing more than minimum wage jobs are yet another cause, the crumbling roads that enable both of the items above to negatively interact are yet another cause, whereas, of course, the crumbling rural farm house and it’s accompanying unused agricultural land that one can only get to by traveling several more miles on crumbling roads is yet another. Having said the above, and if you are hanging in there with me and beginning to see an emerging logic, that logic, which is of course crucial to grasp if in fact we are going to have new 21st century infrastructure, that logic is, in effect, the land all of this other wasted energy stuff skips about on over the course of our daily lives and goes for the most part, entirely unnoticed by everyone virtually every second of every day. Yes the land. The land out in front of the house on West Wrightwood Avenue and the land out in front of the rural Illinois farm house holds the key to the future use and future definition of use of our collective 21st century infrastructure model.
If one takes the time to quietly sit on the front porch of the house on West Wrightwood Avenue, and, in doing so look out at the surrounding land in precisely the same manner one does when sitting on the front porch of that Illinois country farm house, the land still exists. As it does, and for the most part it is mostly paved over, envision that land with the cars and the pavement gone, or perhaps a great deal of that pavement gone and a lot less cars. In fact, imagine all of the original pavement gone and being replaced by organically recycled pavement. Yet before the new pavement is put into place, all of the people who live on the block and work for minimum wage and who used to drive inefficient vehicles on inefficient streets and who now ride public transportation get together to redesign the infrastructure on their particular block before the new organic pavement is put in place.
Well, with nothing but dirt left where pavement used to be, the first inclination is to simply leave the dirt the way it is. But as such a notion is really not practical, many more most certainly are. There are the old household sewer waste lines, water supply lines and natural gas lines running beneath the dirt along the length of the street. There are the old storm water lines doing the same thing. All of these lines are shot anyway so why not replace them. Yet before all of these lines can be replaced, the notion of water in general should probably be addressed. And, as all things having to do with water are in general, listed under the heading of public utility infrastructure, we are now talking about infrastructure, and, in particular, 21st century infrastructure.
At the top of the list of things to discuss about water is of course, rain water and within the context of rainwater comes the rain gutter, the gutter downspout, the rainwater cistern (think old Illinois Farm House here), the rainwater cistern pumping station, the rainwater spillway, and, of course what to do with all of that rainwater both while it is raining and for days on end when in fact no rain is falling at all.
As this discussion is going on, another discussion is taking place. This discussion is all about landscaping, and, in particular flower garden, herb garden and vegetable garden landscaping along with discussions about such things as growing grass, planting shrubbery and new trees to perhaps replace old trees or to simply redesign the neighborhood streetscape entirely to accommodate yet even more public utility infrastructure.
At any rate, once the rainwater and gardening discussion has been concluded and such things as projected rainwater volume, displacement and storage capacity has been determined, the conversation shifts to fresh water supply, the updating of freshwater supply filtration systems to micro filtration systems that offset the load of mainframe municipal filtration systems and the subsequent placement of such micro systems into the block or the neighborhood of blocks surrounding that block from which such a system is finally placed.
Once this discussion has been had, the conversation turns to waste water movement and treatment with the same emphasis on micro waste water filtration system integration into the same neighborhood infrastructure. As the discussion of all such water management is concluded from a purely mechanical point of view, the emphasis now is on metering and regulating all water use activity for the stated purpose of producing altogether new municipal water billing rate structures, which in turn produces altogether new high tech water management industries which in turn produces entirely new high tech water management job categories all of which pay decidedly more than the minimum wage jobs that once put minimum amounts of gasoline into the obsolete vehicles that drove on the obsolete roads to the obsolete minimum wage jobs that are now really not needed any longer.
But, as the conversation thus far has only been about water, there remains those natural gas supply lines that need refurbishing as well as there remains the discussion of what on earth the natural gas is actually going to be used for. Considering the evolution of hybrid personal use vehicles as well as the evolution of a host of commercial use vehicles, placement of natural gas fueling ports for both personal as well as public use becomes yet another aspect of the discussion needing to be had before the placement of the organic road surface can be accomplished. Needless to say, as the now newly created streetscape is devoid of old stuff, new stuff, in quite the abundance starts to emerge in quite the dynamic manner. Just as in the case of contemporary 21st century neighborhood based water management and proactive regulation of the same natural gas is now the subject of regulation. Yet in a decidedly different manner the regulation of natural gas takes on an entirely new regulatory dynamic or infrastructure based responsibility. With the use of natural gas being now diverted in a rather substantive new manner to refuel vehicles it’s regulatory functions shifts from that of being a residential based public utility to being a transportation based fueling utility that of course can and most certainly must be utilized for the stated purpose of purchasing, installing and thus, maintaining for the long term the organic road material that is at this point in the discussion becoming that much closer to actually being installed on that newly redesigned residential West Wrightwood Avenue block.
As everything is essentially looking up for everyone who lives on that block, one of the neighbor’s who works at a minimum wage job spots something. What this person spots is the shadow of above ground electric utility wires as these wires sway haphazardly to and fro from utility pole to utility pole along the street line that once was filled with old vehicles and old pavement. In the same instant, this person also notices the abundance of old trees that have dotted the parkway and have been trimmed for decades in quite the unsightly manner to keep the electric lines from igniting the trees and burning the neighborhood down to begin with. With the issue becoming relocating those lines to beneath the ground and in doing so eliminating all types of historical and now cost prohibitive maintenance issues, the issue in turn becomes the discussion of whether or not to remove some of the trees as well.
Whereas the notion of tree lined urban streets has historically been as a valued personal real estate property selling point as the country farm house, the fact of the matter is that these trees over the years have served to essentially block normally occurring wind patterns from doing their natural job which is in part blowing away dirty, mold infested stale moist air away from the homes in these urban neighborhoods where such major health issues such as upper respiratory breathing ailments are overwhelmingly negatively affecting the physical health of a sizable amount of Americans nationwide. Needless again to say, the rather simple removal of a fleet of ancient vehicles and a pile of hopelessly economically redundant asphalt from an urban block brings to that block a rather dynamic new industrial, environmental and economic possibility all of which goes directly to the actual and real and sustainable valuation of residential property.
Of course, we are not done yet.
With the tree lined streets not so tree lined any more and with new breezes blowing, more sun is now glowing (no this is not my version of poetry here, but, it does work). As this is the case, micro solar arrays as well as micro wind turbine technologies now have a significant new venue from which to grow. While what I am stating here is not really a new source of knowledge, as companies nationwide are in fact gearing up for this inevitability, what might be new here is the manner in which truly integrated financial management of these technologies integrated with the larger electrical grid is in fact defined. As that definition essentially is the nature of long term funding for ongoing electrical grid improvement and maintenance, it is as well, the establishment of a rate structure virtually every homeowner, municipality, energy region and regulatory body can finally understand, agree to and finally after far too many decades of pointless politicking, finally getting on to implementing, creating among other things, mufti-generational high tech jobs in virtually every American energy sector and from within the manufacturing, installation and long term and ongoing service sector entities represented from within these energy sectors.
As the idea of simply taking a look at one given urban residential block and doing so from within a most comprehensive and multi-segmented infrastructure baseline is in fact what I am discussing here, the American housing industry will remain dormant until in fact this does occur.
Thanks for stopping by.
Mike Patrick Dahlke
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