Where have all the home buyers gone?

posted at 10:56 am on May 19, 2011 by Jazz Shaw
[ Economics ]   

Earlier this week, Ed Morrissey covered the still dismal numbers for housing sales, new constructions starts and foreclosures. But raw data doesn’t put the same face on the story that you find just by driving around various neighborhoods. Even if you’re not looking to buy or sell right now, it’s hard not to notice a particularly vacant look in many single family home communities, at least in some parts of the country.

One place I wouldn’t have expected to be hit quite so hard would be the black hole where all money flows, Washington, D.C. But, as Liz Mair points out, this effect is striking the beltway as well.

Everywhere I go lately, I see new or barely “pre-loved” homes sitting empty in massive gluts, it seems. Up the street from me, there is a big condo complex that I believe was completed in 2009; I’ve only ever seen a couple of lights on in the entire set of buildings at night– the whole thing is basically vacant, and this is in an area where a lot of people rent and there’s a lot of demand…

Before the 2008 crash, we heard a lot of stories about people who owned multiple homes, which they intended to rent out (though it’s not clear if they ever did) or flip to people who intended to rent them out. Hate to say, but my gut tells me that at least in some places, we may have too much housing either as a matter of course or specific current circumstances (i.e., a lot of cheap “used” property that has been foreclosed upon; a lot of people out of work and unable/unwilling to assume the responsibilities that come with owning a home and maintaining a mortgage). If the economy ticks up, we may see concerns surrounding the housing market and construction decline. But my sense is, even if that happens, we may still observe more supply than demand.

The news is bad in many places, it’s true. But not everywhere. These trends are always regional, as one report shows, and there are a few places where the trend is upward, not down.

Builders had been hopeful that a strong spring season, traditionally the best time for home construction, could help power a turnaround. But that has yet to happen.

Regionally, the West saw a two-point gain and the South received a one-point gain in their index of construction activity, both to 16. The Midwest held steady at 14. The Northeast fell five points, to 15.

The index gauging current conditions rose one point, to 16, while the recorded foot traffic of prospective buyers also rose by a point, to 14. But the outlook for the next six months fell two points, to 20. That was the lowest level in eight months.

Let’s see if we can’t figure out this puzzle. The four worst states for housing sales were Arizona, California, Florida and Nevada. But regionally, the biggest drop came in the Northeast. So who were the big winners? Among them, South Carolina and Texas. One of the biggest individual losers in the Northeast? Connecticut.

What do the elements of this tale have in common? States embracing right to work laws and electing legislatures who are lowering taxes to attract businesses which bring jobs are seeing growth in housing sales. States who seek to balance their budgets on the backs of higher taxes and engage in anti-business practices are seeing their populations flee and their houses go unsold.

Did this really come as a “Wow, I could have had a V-8″ moment for anyone? Class dismissed.

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