The Future of Housing
Decatur Metro | August 24, 2010Will your house ever go up in value again?
Yesterday’s New York Times points out the unique set of circumstances over the last half-century that convinced our collective consciousnesses that housing would always be a good financial investment.
For the first half of the 20th century, he said, expectations followed the opposite path. Houses were seen the way cars are now: as a consumer durable that the buyer eventually used up.
The notion of housing as an investment first began to blossom after World War II, when the nesting urges of returning soldiers created a construction boom. Demand was stoked as their bumper crop of children grew up and bought places of their own. The inflation of the 1970s, which increased the value of hard assets, and liberal tax policies both helped make housing a good bet. So did the long decline in mortgage rates from the early 1980s.
This article unfortunately fits what I’ve been seeing around town, just informally reading the flyers in the for-sale-take-one boxes. Unsettling given that I hate yardwork and thought I was doing all this for the good of the family. Fingers back in ears, la-la-la-la-la-la-la.
Most new housing depreciates in real terms over the first couple of generations of use. Suburban residential development has essentially been serving a market that sees housing as temporary or disposable – people who tend to buy in new suburban developments don’t tend to stick around.
What results is a steady decline in values and the neighborhood until it gets torn down or gentrified. In order to be gentrified it needs to have some kind of intrinsic and/or geographic value to attract pioneers. Inman Park has seen this full cycle.
This dynamic was masked during the past couple of decades of easy money, but will be back in play for the foreseeable future.
The good news is that Decatur’s single family homes have basically been around for generations, and completed the bottoming-out process years and years ago. Decatur is a good housing investment, especially relative to the suburban market, due to location, scarcity, and intrinsic/distinctive value.
TeeRuss is right. Decatur has some things that are unique and very sought after. Great community, proximity to dowtown Atlanta, very good schools (especially when compared to our neighborhing school districts… Atlanta (CRCT cheating scandal) and DeKalb (superintendent indicted).
I don’t think that values are going to skyrocket like they did a few years ago in Decatur… at least not for a decade or two. However, I think our “intrinsic value” will at least keep home prices relatively stable.