The Continuing Decline of Chicago Housing Prices
My colleague Dennis Rodkin stopped by 848 yesterday to talk housing prices with Alison Cuddy, in the wake of the latest (bad) housing report. "It's really a span of 16 years in which a house is a non-investment," he told Cuddy. Rodkin's appearance followed the most recent iteration of the closely-watched Case-Shiller report, which found that the only city to post monthly and annual gains was Washington, DC. Some notes on the status of the housing crisis:
* One thing Rodkin and Cuddy discuss is that home-ownership has declined to '90s levels, and whether the dream of near-universal housing is really such a hot idea, something that was gospel during the Clinton and Bush administrations and a belief that helped inflate the bubble.
There was an interesting op-ed in Bloomberg the other day about that which puts home-ownership in an international perspective. In 2004, when I graduated from college—and looked around and decided I'd probably never be able to afford a house—69 percent of American households owned their houses. And at the time seemed like it was going up.
The authors note that some of the hardest-hit European countries also had sky-high home-ownership. In Germany, which has survived the economic downturn better, less than 50 percent of households own a home. The Bloomberg editors call 64-65 percent a "golden mean."
* Is it worse than the Great Depression? No, not close. The numbers on housing from the 1930s are spotty, but in Manhattan housing prices dropped 67 percent, whereas the drop during the Great Recession is something like half that.
* I can't help but think that one reason for continually soft housing prices, besides continually high unemployment and high household debt levels, is the associated risks of buying a house in our strange new economic era. HAMP, the Housing Affordable Modification Act, has been a bureaucratic nightmare for borrowers, and the MERS-created "chain of title" problem brings into question who actually holds the title on millions of homes throughout the country.
* Rodkin and Cuddy also discussed whether people still think owning a home is a good investment, as opposed to renting and investing the difference. The best thing I've read about that subject as it stands right now is James Kwak's "Renting and Buying Compared," inspired by "The Effectiveness of Homeownership in Building Household Wealth" (PDF).
Photograph: juggernautco (CC by 2.0)