From a small northwestern observatory…

Finance and economics generally focused on real estate

How many homes do we need?

with one comment

It is HARD to keep up with a blog when the news seems to move out from under you every day.  Now that the election is over, we can get back to normal stuff, like how’s the economy doing and where do we go from here.

Back on the campaign trail, ONE of the presidential candidates  (HE will remain nameless) complained about the level of home ownership, which hit the “lowest level” in 50 years or so.  Admittedly, that’s true, but also a bit misleading.  Since the peak — which led, by the way, to the recent mortgage melt-down, home ownership in America declined from 69.2% (June, 2004) to 62.9%% (June, 2016).  That’s not a huge decline, but indicative of just how sensitive our economy is to the level of home ownership.  I’ll be the first one to admit (and in my early days, I did more than a bit of research on this) that lots of good things eminate from new home construction and from the home brokerage business.  For one, there are a lot of good jobs at stake — from skilled carpentry to mortgage lending and everything in-between.  I’ll also note that there have been many studies thru the years focused on the social benefits of home ownership, which add to neighborhood quality, school quality, and even reduced crime levels.

That said, most good things come in “optimum” levels.  For example, eating a well balanced diet is superior to either starving or binge eating.  Human bodies are optimized for a temperature of 98.6F, and will die if internal temps are sustained even a few degrees on either side.  Not enough water and you die, and yet people drown each year from too much.  See the connection?

Home ownership would not have hit record levels without lending practices that were neither healthy nor sustainable.  We don’t know exactly what the optimum level of home ownership in the U.S. economy might be, since the economy is anything but static.  However, right now, the economy seems to be chugging along quite nicely with current home ownership levels.  Are we at a sustainable optimum?  Perhaps, but only time, and stable economic policies, will give us some empirical data.

Written by johnkilpatrick

December 7, 2016 at 3:53 pm

One Response

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  1. Welcome back!

    Audrey H Shifflett

    December 8, 2016 at 6:00 pm


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