As a result of the 2008 economic crash created by the lack of regulation of Wall Street gamblers, new home construction has slowed to a relative trickle. According to the National Associaton of Home Buildiers (NAHB), the number of housing units started in the U.S. totaled only 609,000 in 2011. That compares to 1,131,000 in 2006 as measured by the US Census Bureau and Department of Housing and Urban Development.
Using NAHB estimates that for each new home built three jobs are created, these numbers represent a loss of more than 1.5 million jobs. They also represent a loss of $67,000 in federal taxes and $23,000 in state and local taxes for each home not built!
And thats just part of the problem. In addition to the jobs lost that are directly related to home construction, there are job losses for landscapers, pool builders, movers, the makers and sellers of furniture, window treatments, appliances and more. Indeed, a writer for The Outer Banks Voice tracked the number of people involved in building his new home in 2010. He counted a total of 219!
Now multiply that number of 219 times the 522,000 fewer homes built in 2011 than before the Great Recession and you see the scope of the problem.
But there is some good news. NAHB estimates 1.7 to 1.8 million new homes are needed each year to accommodate population growth and replacement of older housing stock. So we are creating tremendous pent-up demand. Sooner or later, the housing market is going to explode. But its going to take time. Those who bought homes between 2005 and 2008 were burned by home ownership. They were taken advantage of by unethical mortgage lenders. They were foreclosed by uncaring banks. And even if they didnt lose their homes, they have found that their homes are worth far less than before.
How do you get these people to forget the recent past and jump into the market again? Given the low prices of homes and low interest rates, there are plenty of incentives. But, unfortunately, its going to take years.
Americans tend to have short memories, but not when it comes to their money.