Christopher B. Leinberger Thursday, April 28, 2011
The front page and lead home page New York Times story this past Saturday had the startling headline: “Bad Times Linger in Homebuilding.” The Times concludes that “A long term shift in behavior seems to be underway. Instead of wanting the biggest and newest, even if it requires a long commute, buyers now demand something smaller, cheaper and, thanks to $4 a gallon gas, as close to their jobs as possible.”
This might have been front page news three years ago, but today it’s a history lesson. Ironically, the Times dateline was Chicago. That’s the home of Scott Bernstein and the Center for Neighborhood Technology which has been doing some of the best national research on the location within metro areas of the housing bust. CNT’s conclusion from way back in 2008? The mortgage collapse took place on the auto-dominated suburban fringe while walkable urban housing, whether in the city or the suburbs, pretty much held its value.
Of course, the Times is actually in front of many others in their understanding of what caused the mortgage meltdown and the subsequent financial crisis. The business media in general, the banks, the Treasury Department and FHA, Fannie Mae, and Freddie Mac still don’t truly recognize what got us into this mess. If you don’t know what caused a crisis, how can you figure out how to mend the damage and avoid it in the future?
Certainly past mistakes are to be avoided. But if you are looking for how real estate and housing can play a constructive role in the economic recovery, my not-yet-ancient-history essay on “the next real estate boom” shows how capturing unmet demand can get the economy back on its feet.