We have all heard of the Ant Philosophy, right? Essentially, they never give up. No matter how many times you squish their little ant hill, they build it again. No matter how many times you flick them away from your food, they come back. They will go over, under, and around anything in their way to get where they are supposed to be. I like to compare the Ant Philosophy to the American consumer. We have had a global pandemic, the quickest increase in interest rates in history, a very divisive presidential election, and an inflation crisis all back-to-back, and yet nothing has stopped the American consumer from buying homes.
So, what would stop the consumer, you wonder? The only things that would stop the buyers from buying is what we call a “job loss recession” or if lenders just flat out stop lending. Those things aren’t necessarily likely to happen, but the problem is, the way we are headed is not sustainable with housing.
I’m gonna get on my soap box for a minute with this one, so stay with me. The solution I see? We need to get with the program and the government needs to start building affordable housing, and quick. This isn’t an economic or political argument. It’s a common sense one. The current state of the housing market comes down to two words: housing inventory. The government needs to come up with some massive builder incentives to start major production of new inventory. These can come in the form of tax breaks, government funding, etc.
Before you skewer me for offering such a solution, let me lay out just how behind we are on building new inventory: Every decade from 1950 to 2010, we have built an average of 25 million new homes in this country. However, from 2010 to 2020 we have only built a quarter of that. A quarter. I don’t know how else to lay it out: There. Are. Not. Enough. Homes.
Some may call this socialism, but maybe that’s not so bad when capitalism isn’t actually working? Government interventions aren’t anything new. In the past, the government has built highways to nowhere. Why? The infrastructure always follows. Warehouses pop up, jobs are created and the people who work those jobs need places to live, therefore new homes are built. Then suddenly the road to nowhere is actually a road to a booming new up-and-coming place to live.
I’ll get off my soapbox now, but let me leave you with this: we need to be more like the ants that never give up and always find a way to get what they need. If we rest on our laurels, I don’t see a way that housing inventory gets freed up unless we wait for a massive economic event which will bring a host of new issues along with it.
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