Baxter Pharr: More housing units not the answer
Silverthorne, CO Colorado
In trying to warn people of the dangers of flooding the market with cheap housing, I sometimes feel that I am David fighting Goliath. Nevertheless let’s look at some important facts:
1) The U.S. economy has been in a recession since December 2007, which many are calling the worst since the Great Depression (during the Depression, real estate dropped about 75 percent in value across the country);
2) The U.S. economy has lost 3.6 million jobs in the last 12 months, 80 percent of those in the last five months;
3) The median price for existing homes dropped 31.5 percent from December 2007 to December 2008 in the western U.S.;
4) In Summit County, December 2008’s monetary volume for residential sales was down 55 percent compared to December 2007;
5) In Summit County, the number of transactions in residential units was down more than 50 percent in 2008 from 2007 and the total dollar volume was down more than 60 percent from 2007;
6) Last Tuesday I counted a grand total of 10 help wanted ads in the SDN, and on Wednesday I counted 13;
7) A quick check of realtor.com revealed 70 properties priced below $200,00 in the 80435 zip code (granted some of these were time-share and partial ownership units);
8) There is a studio for sale in Dillon Valley East for $124,900. Granted this is not the Taj Mahal, but I remember when these were selling for $50,000 in 1997;
9) There are six deed-restricted units for sale by the Summit Housing Authority on Dewey Placer near the Tiger Rd.-Highway 9 intersection (this complex was completed over a year ago) and;
10) Real estate is a commodity like crude oil or orange juice. As we learned in Economics 101, it is governed by the law of supply and demand. This states that if the supply is increased without increasing demand, the price will drop.
The best use for all the money that is pouring into the coffers of the Summit Housing Authority by our increased sales tax is to help prospective homebuyers with downpayment assistance on existing units. Flooding the market with new units will only keep real estate prices depressed.
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