Wednesday, June 8, 2016

Urbanism: Will Housing Eat The Economy?

(Drivebycuriosity) -There is an abundance of pessimistic predictions. Now comes a new one. Conor Sen, a blogger & former hedge fund analyst, claims that "housing will eat the economy" (  csen ).

He assumes that the Americans will spend much more money for buying & constructing homes. This trend will leave them less money for purchasing other goods & services. An alleged housing boom should also draw too much capital into the housing market, slowing investments into other industries. To make it worse, the alleged housing boom should pull too many workers into the construction sector leaving to few workers for the rest of the economy. Really?

Sen`s "predictions" ignore 2 important trends:

1. The younger generation, the "Millenials", buys less homes than the generations before ( latimes ). It seems that rising home prices, which are ignored by Sen, are hampering them to buy homes.

2. In the recent years big cities like New York have been growing faster than the suburbs ( cityobservatory ). I looks like that metropolises are regaining popularity and the flight to the suburbs has stopped -  maybe because of climbing home prices. There are much less homes in the big cities - most residents of Chicago, New York & Co. live in tenant buildings -  so the return to New York & Co. is curbing the alleged money flow into the home market.

I believe Sen`s prediction is just the usual scaremongering.

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