Money got too cheap; collective amnesia set in. Too many of us forgot that time is always more valuable than space. And so oodles of square footage, the obligatory two-story front entry-way, walk-in his and hers closets complete with crown molding, and kitchen islands topped with expanses of granite were the necessary signs of having "gotten there."
Some paid for all the extra space with money they had, and some with money they didn't have but could get access to. It takes a lot of people with loans to move the national figure for home equity below the half-way point, so it's a senseless exercise to blame either housing's woes or the credit crunch's pain on dishonest mortgage brokers or a greedy bunch of Wall Street hedge fund managers, or even the bank bosses–although there are a few of each who should probably be exiled to spend their lives on the same deserted, not-so-pleasant island together.
Point is many, many of us bought the deal for more square footage and molding, and now we've got to do something about it. The virtually collective error requires a virtually collective correction. The cost of all the space–as the economy recapitalizes–will be felt in lost time. Especially time at home, sheltered from financial worry.
Empty nests may have to be put on hold. Many baby boomers covet the idea of enjoying an empty nest like their fiscally prudent parents, at least for a few years before they move their fiscally prudent parents in with them. They'd thought of buying the urban down-sizer, rural escape, or seaside retirement dream, and enjoying that "prime" of life on terms they set themselves.
But it's going to take a few extra years for that phase of housing demand to materialize in a big way, and in the meantime, more boomers will be hosting their 30-something-year-old kids who, thanks to the state of the economy and jobs and the availability of credit, will need a tide-over place to live.
Talk about pent-up demand. Imagine all the people who're going to have to live together while the economy sorts itself out and liquidity makes its way back into the consumer lending pipeline.
The radical kick-start notion of some of housing's smarter minds is the equivalent of a baseball line-up with no home run power. Housing's version of "beat out an infield hit, steal a base, bunt him to third, and hit a long fly ball to manufacture a run" goes like this.
Buy an 11-acre parcel in an urban area's inner ring, preferably near public transportation, for cents on the dollar, and get somebody good at working to win over the local community to support a high-density re-zoning. Build micro single-family detached houses on 1,500-square-foot lots, 22 to the acre, at $150 per square foot. Put margins on top of directs, and you have a business that might get a 30-something-year-old to move out of the bedroom he or she has slept in since he or she was 11.
Assuming some class of credit may be available to those who can come up with 20 percent down and make a monthly payment in the neighborhood of 34 percent of monthly household income, can big builders help their cause any with smart, small designs, especially aimed to get first-timers off the sidelines? Sarah Yaussi's "Sneak Peek" analysis, starting on page 26, not only maps out business imperatives, but sheds light on the kind of innovative design ideas for production home building that will catalyze recovery before long.
Can home builders play small ball? Can they transform their operations and work in urban areas' inner rings? Can they buy smaller land, build smaller places, and pack in value and lifestyle? Can they subtract a bunch of that unnecessary space, and give people back what they'll value for a lot longer–time?