We all keep hearing about the "housing market" as though it was some fixed concept that just kept running on and on all by itself. Most politicians look back at the past 10 or so years like is was "normal". Building millions of homes while the basic population growth rate was much less did not seem to bother anyone. Further, building homes that were far larger and more expensive than those built in the past, also did not seem to raise many eyebrows. Didn't the word "flipping" alert anyone that there was a big chain letter type game going on in the housing industry? Look what happened when the music stoped? In reality, we have two problems caused by the run up in the housing industry. First is the over stocked and over priced homes that were built and second the normal healthy industry that was neglected while most of our wealth went into homes that were not needed. What we have is a double loss here. Now, what is the solution?
First, we have to accept the stupidity of most of us who allowed the real estate chain letter to get started and go as far as it did in the first place. Our housing market is bankrupt and like a company that is bankrupt, it has to go thru some hard times and restructuring to get back on its feet. Getting back to normal is not going back to the levels that we were at. Those levels were stupid. Future levels will have to keep pace with population and correct for the over sized and over priced homes that we built in the past. The market will be many times smaller than it was in the past and that is just a fact so we all need to get used to it. We are looking at a double or triple whammy in the housing market due to having to correct for the stupidity of the past.
Second, what should we have doing instead of the feeding frenzy of the past 10 years real estate market? That is the question. We lost over 10 years of what we should have been investing our wealth and time in. That is a very big piece of pie and it will take at least twice as long to dig out as it did to dig ourselves in. If it took 10 years to get in the hole it might take 20 do dig out. This all assumes that while we were digging our hole, our competitors were building their bank rolls and basic industries. It is like a foot race, it you ever get very far behind, it can take a very long time to catch up if that is even possible. We had a WWII where most of our competitors were bombed to rubble and we were there to easily pick up the pieces. There is not a WWII to allow us a special advantage digging out of this one. Think about it? What do you think the USA would look like today if most of the rest of world were not bombed into rubble? Well we are going to find out because in this one, we all seem to be starting off even. The question is what we are really made of not the special picture that emerged after WWII of us that we all like to lay claim too.
Look in the mirror and tell me what you really think and next time you hear someone talking about the "Housing Industry" remind them that is was all smoke and mirrors and that the real "Housing Industry" of the future will be a very different thing.
