The housing crisis and carbonfree.....
It seems to be everywhere stories about the housing crisis. A lot of the articles focus on the economic and financial damage that is happening with the increasing number of subprime loans defaulting and the impending defaults that are coming when loans reset to a higher interest rate. While I am extremely interested in matters financial, I thought I'd take some time to explore some of the consequences of the past few years of housing appreciation.
It is no secret that houses got more expensive, but one thing that is often overlooked is that houses also got larger, a lot larger that the word "McMansion" entered the popular lexicon. With the free flow of lending money, builders built larger homes in order to reap larger margins, and now it's time for the bill to be paid. The environmental impact of these houses is just starting to be felt, most of these homes due to their size were built further away from city centers and require an automobile to live there. My last post on "walk score" can highlight that, if you look at most new developments built in the last five years, I'm sure you'll find that most have a very low walk score.
In addition to their larger size, these new homes require more energy to maintain. More room, more electricity and gas heating. This is exacerbated in that many of these new homes have vaulted ceilings where the heat hides. Someone once told me that the French aristocracy fell in part due to the excessive expenses in maintaining their estates. With the cost of fuel oil increasing, heating homes will be both environmentally and financially costly. It's easier to expand a home than to shrink it, so we're going to be living with these mega-homes for a long time.
Lastly, larger homes have more rooms to be furnished leading to more consumption and resources for rooms that are never used. How many times does one use a living room vs a family room?
The housing boom of the past five years is only now being felt, and I don't think it's going to tickle.