Housing Cycle Semantic
It was officially late August ‘09. Leading edge Baby Boomers had taken to flocking in droves to rally against their President’s health care plan. They were exercising their Bill of Rights license to flock in droves to rally against their President, bear arms, curse and vent their spleen, and go on random road trips to the annoyance of all of those who continued to feel obligated to show up at their jobs day after day, and read about the rallies in the news.
Good ol’ time protest felt good. Running through James Madison’s Amendments, and exercising as many of James Mason’s Bill of Rights as one could think of or make up felt good. At least, better than the alternative, sweltering in business attire during summer’s dog days, gazing wistfully at each ATM we passed as if it were a temptress, beckoning seductively as we supressed our base instincts to spend with abandon.
Sweating, not acting the spendthrift, not using home equity or credit cards for granite counters, or a new Navigator, or Muffy’s 50th, or a Belize holiday, not sending our own private debt bomb into the global econo-sphere had gotten to feel a little deprivational.
Yelling and screaming, and not letting Senators and Representatives get a word in edge-wise to our ranting questions about why we won’t be allowed to just continue making a few senior management executives for a few health maintenance insurance organizations very, very rich people at our expense felt like a relief from the doldrums of consumer retrenchment.
Eight years of W was morphing, quite probably, into eight years of W, and some fair number of people, it’s clear, were hopping mad.
And in real estate and business, it was the better of times, it was the less worse of times. We could only begin to wonder, what the dickens is going on here?
All reality had become, in fact, second-derivative reality, where not-getting-bad-as-fast was the new good. In second-derivative reality, no sign of bottoming led to incipient bottoming which led to a bottom, which in turn led to apparent signs of recovery. Much was uncertain. What was clear, though, is that those with the most technical knowledge about what went wrong a year earlier and what continued to ail the system were far more fearful and dour about these “apparent signs of recovery” than the ones who know less.
Like diets and exercise, we listen to the ones who know more; but we act with those who know less. Why? Because the odds of having Nouriel Roubini, or Robert Shiller, or Paul Krugman as a next door neighbor are slim. They may be afraid of a W; ones who know less are less afraid of that.
I.e. the “rest of us.” For the “rest of us,” that glass is not three-quarters empty. Never mind more people on the dole, more people spending so long on the dole that the dole’s running out, and more and more industries running aground on the realization that maybe there’s no real place for them in the real new economy. The real new economy is that, real. The unreal new economy is what all the media hubbub was about for the first six or seven years of the current millennium. If the media companies that got rich off their spin and sales from buying into the unreal new economy could purge their archives of how they’d cannonized the same business executives they’re hanging today, they would.
In the real new economy, jobs will come back slower, but they’ll necessarily come back in more sustainable parts of the economy. Are we already discounting and investing in stocks based on that?
And so, back to real estate. Apparent signs of recovery threaded together with lower asset costs that neared affordability levels not seen for decades. These “corrected” prices, in turn, blended with historically low interest rates and tax credit incentives to make “the rest of us” stop being so afraid of how prices were still caving, and start being afraid of what they’re always afraid of when times start to get better.
That is, a next door neighbor who can brag that he or she paid much less for more. We should all be so lucky as to be afraid of that.
Here’s what we know. Home building organizations of all stripes and sizes are trying to buy land now. Many of the neighborhoods they’ve been able to sell homes in in this tough market are filling up, and they need to be replaced with new communities, new stores, if you well, so that selling–and life-breathing cash–can continue.
So even though most home building companies have land holdings they can not move in today’s market, they need to find lots that can be turned quickly into sales for the demand level that is out there and expected to get incrementally better.
Builders, just like home buyers, tend to like to brag that they got more for less. So late August ‘09 dog days are not at all as sleepy a time in home building as you might imagine.
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