patrick.net

What a terrible idea. This would encourage more builders to build crappy, sub-standard houses in places where people don't want to buy them.
We already have too large of an inventory of unoccupied homes, and you want to build more? How about no more credits and just let the market sort itself out?
How about a $9,000 credit to me for getting out of bed in the morning?

There are already too many houses built that are empty or for sale out there.......The central valley in California, desert areas of the Inland Empire, Las Vegas, Phoenix, and Florida immediately come to mind. The trend is to move closer to sustainable urban areas with transportation, jobs, shorter commutes, etc., not rural areas that have plenty of cheap land. In California anyway, there isn't that much buildable land left in desirable urban areas. It doesn't cost that much to build a house, just look at what your homeowners insurance coverage is and you will see what they pay to rebuild. The biggest cost of housing is the land. Like the 8k buyers credit, I don't think a 9K tax credit is something that would spur the econony or be something that many people would be interested in.

God make it STOP!
Will you people go away?

The $9k credit won't help bankers. It's a no-go.

Obama is like a guy at an all you can eat buffet during last call. Eat as much as you can, because you aren't getting another turn.

How about we pay people $9000 to SELL their house?

We'll need more houses within a few years. I think the last numbers I saw where 1.6M new homes per year are required and we are currently doing about 600K per year, which means 1M are being pulled from the previous years inventory of over building. Right now the credit wouldn't be all that useful, but within a year it might be!

A credit wouldn't create smaller houses either, perhaps a credit for green houses? That would be good. That helps push the energy business as well, and possibly reduces energy requirements on those homes. While this isn't a horrible idea, the concept that we would build smaller houses is over zealous. We simply won't do this. The fixed cost of building is fairly high, so the difference between a 1500sq house and a 2500-3000sq house probably isn't all that much. Land is expensive (In most parts), Permits are expensive, Building design/blue prints, Hiring a contractor, large appliances, and bathroom fixtures, are all required in any size home.

pkennedy says

perhaps a credit for green houses?

Define "Green"?

Zlxr says

Give people a chance to rent a small unit for low low rent and save to move to a bigger place at a later date. Also - so save money the tenants should either participate in cleaning and upkeep or pay extra for someone else to do their share.

Dude you just described Stripmall Projects, with Condo commandos barking out errand and task orders to the tenants.
That sounds like a nice day in Hell to me.

Who are you people?

To hear you folks it sounds like there's troves of potential buyers out there that is so desperate to find a place to live "ANYTHING" and they'll do anything for it, but there just isn't houses available for people to buy.
Yet, to hear you tell it, they also need a $9K incentive to kick them over the door way.

@Tenouncetrout
"Green" could mean a lot of things. From double pained windows, solar water heating, energy star appliances to extra insulation.

@robertoaribas
It does explain why we've only had 600K houses built, and not the 1.6M normally required.

There are roughly 1M new immigrants a year moving to the US. There are children coming of age and starting families, there are homes that need to be rebuilt.

Zlxr says

You do not get back up on your feet by paying $1,000 per month rent

Nor do you create a new substandard to prop up the new failing standard.
The problem isn't so much lack of available or affordable housing it's lack of work and funds.
Our Tax dollars is giving every CEO son of a bitch on Wall street 6 and 7 digit bonuses, and filling their corporate coffers with billions to squander and hide. This after they told us if we didn't the economy would collapse. They meant theirs not ours. They've taken the money and not one damn penny is being converted into productivity that puts American asses to work.

And it's BULLSHIT dialog like this that makes excuses for those Bastards in Washington that made it so, and every crooked son of a bitch on Wall Street. It gives them a free pass, while we pretend what the people really need is converted strip malls, 9K incentives to take two to the head, ect...

Ask not what can our country to for you, ask what can our country do to stop the Corporatocracy.

@robertoaribas
1.6M homes are required every year to handle immigration and homes that need to be rebuilt.

Since we built 600K last year, that leaves 1M homes we pulled from the surplus. We have done that for a couple of years now.

So yes, you are correct, several million homes in surplus, pulling 1 million out per year of that approximately.

Since we built 600K last year, that leaves 1M homes we pulled from the surplus. We have done that for a couple of years now.

(ahem)

So yes, you are correct, several million homes in surplus, pulling 1 million out per year of that approximately.

Where did you get your 1.6M number? I would like to see that, and how that data was arrived at, and what lobbyist group was behind the study.

Short of mass arson, there will not be any serious dearth of residential housing anytime during your natural lifetime. As it is, they're bulldozing houses that were never finished. Step away from the spreadsheet and take a look around.

In fact, people are ignoring them in droves, which is why AZ, NV, FL, and the far inland valleys of CA crashed more severely than anywhere else. A large number of them are already completely valueless as housing.

So, these 1.6M "required" annual home builds are located exclusively or even almost exclusively in the "otherwise desirable areas?"

Nobody will buy a house in the middle of a desert or swamp without a very good reason.

You're forgetting all the well-heeled, bronchial misanthropes out there...

Austinhousingbubble says

Since we built 600K last year, that leaves 1M homes we pulled from the surplus. We have done that for a couple of years now.

(ahem)

So yes, you are correct, several million homes in surplus, pulling 1 million out per year of that approximately.

Where did you get your 1.6M number? I would like to see that, and how that data was arrived at, and what lobbyist group was behind the study.
Short of mass arson, there will not be any serious dearth of residential housing anytime during your natural lifetime. As it is, they’re bulldozing houses that were never finished. Step away from the spreadsheet and take a look around.

The concept is pretty simple. The US population is around 310M. The population growth rate is a little less than 1%. That means the population is growing by about 3M a year either through birth/death rate and net immigration. A 3M population growth = about 1.2M household. Approximately 400K housing units are lost per year from natural causes, which means around 1.6M units are needed to keep up with population growth and depletion.

That is the big picture #. Of course, in this recession, people are doubling up or young adults are staying with their parents longer so for the short term new household formation is not 1.2 million, more like 500K. The idea is eventually the same people who are doubling up will be unwilling to do so in the long term thus eventually there is pent up demand as well. Once those demands unwound, there will be a housing shortage if those 500K unit building rates are sustained for long periods.

You're not going to have 100% occupancy rates, that will cause housing cost to go through the roof, 95% is still considered landlord favorable to push up rents and price. Of course, if you are in Vegas, Miami and the CA inland it will take a long while to get it into balance. In where I live in San Francisco, they have essentially stopped building SFH for 20 years. If you want lower housing cost, you definitely want them to build.

The concept is pretty simple

Pretty inelegant, too. Very broad strokes with not much gradient.

The idea is eventually the same people who are doubling up will be unwilling to do so in the long term thus eventually there is pent up demand as well.

These people probably aren't willing to double-up now -- and just because they'll feel all pent-up later doesn't necessarily mean they'll be able to do anything more about it then than they can now.

If you want lower housing cost, you definitely want them to build.

I don't think so. Just for starters, interminable residential construction would equal sprawl and aesthetic blight. If you really want lower housing costs, you need to start with educating consumers in the matters of basic personal finance. From my experiences/interactions with various people, I can easily conclude that Patrick.net is not a sampling of the broader public psyche. Simply put, not enough people realize that high housing costs equal a lopsided economy with a disproportionate amount of their wealth tied up in mortgage debt for an immobile and illiquid durable consumer good.

@Nomograph
The funny thing is, that many of those homes will probably become desirable within 3-15 years as baby boomers look for warmer climates that are cheaper and potentially more suited to their needs.

Good point on the number of houses built in the wrong places, that will definitely have a good effect on construction over the next couple of years.

@Austinhousingbubble
Those broad strokes were well calculated out by warren buffet. Don't mess with a man that's been guessing the right answers for so long! The strokes are broad, and generalized but based off solid information. At least SF ace also tossed in some of those numbers, you simply ignored everything. How long do you think a population growth of 3M people can keep cramming into the same homes? As Nomo points out, those people aren't magically appearing in places like Arizona, they're appearing *ALL* over the country which means they're going to be living in those locations. Places like Arizona really make the numbers look bad for everyone.