By Boyce Thompson. Try this exercise. Transport yourself back to the time when you entered the industry. For baby boomers, this may be the late '70s or early '80s. What were the big issues facing the industry back then? Are they any different from the ones facing us today?
I first started writing about housing in 1980, two years after BUILDER magazine was born. Then, as now, the industry lived with the constant threat of a recession. In 1978, housing starts hit an all-time peak of 2,020,300. By 1982, they stood at half that amount, 1,062,200. Though we may have escaped the last 12 years without one of those precipitous falls in a fever chart that looks like the readings of a terminal patient, we still wonder when the end will come. It's in our very nature.
The idea of linking home buyers with institutional investors to provide a steady flow of capital into the mortgage market was a dream back then. To some, it was a pipe dream. Now, thanks to the efforts of Fannie Mae and Freddie Mac, it's a reality. But it's one that the industry can't take for granted. It's hard to pick up a business journal today without reading a discussion about how too much credit is flowing into housing thanks to these government-sponsored entities.
Over-regulation has been a battle cry of the home building industry for as long as I can remember. In the old days, the lines were drawn over impact fees, which builders argued discriminated against new-home buyers. The industry lost that battle. Now steadily mounting fees and restrictions have made it difficult to build affordable housing for working America. The Bush administration has taken up the gauntlet of over-regulation. Will the outcome be different this time?
When BUILDER began publishing, the country was struggling with the Arab oil embargo. Remember the gas lines and prices that rose to nearly $1.40 a gallon? That would be $2.60 a gallon today. The event sparked decades of research into energy-conserving technology. Energy codes were tightened. We're still tinkering with the next big thing. Now the focus is on a zero-energy home that produces as much energy as it uses.
The nation is still caught between a rock and a hard place over what to do about housing for the very poor. During the advent of the Section 8 program, policy makers used to talk about a Catch-22 proposition: If you spend enough federal money to make a dent in the problem, you run the risk of voter backlash over the expense. If you don't spend enough, you don't solve the problem, which can create a different kind of political backlash. Political momentum seems to be building for more federal spending on low-income housing. But will subsidies be large enough to make a difference?
Like a surfer trying to hold a wave, the home building industry has always been at the mercy of demographics. When Builder began publishing, builders were waiting for baby boomers to flood the market. When they did, builders were there with an explosion of condominiums. Now, as the industry prepares for the children of these boomers to arrive on the scene, the so-called echo boom, it begs the question: Will we see another crest of multifamily housing in the next five years? Not unless vacancy rates improve.
We hope you enjoy this special issue of BUILDER. We had a lot of fun combing old issues, looking for tidbits of information that were somehow pertinent to today's situation. This much is true: The more things change, the more they remain the same.
Editor in Chief