Real Estate Update Part 3: Build it....They Will Come. On Accessibility of Future Housing
In the late 2000s, leaders in the Western media became aware of what they termed “ghost cities” all throughout China. Numerous pieces of journalism, clickbait, and documentaries were published about these fascinating, haunting, and mysterious locations – devoid of human life. Much consternation and even criticism was levied against the towns, but it appears the planners in multiple locations may have the last laugh. Chenggong, oft referenced for its 100,000 empty apartments is now an active suburban town. Kangbashi, a place that TIME magazine in 2010 mocked as “a new Chinese city that, apart from people, has everything” now apparently lacks for nothing, with a top-notch secondary school attracting over 150,000. Rounding it out, Zhengdong New District, termed desolate for “miles and miles” by 60 Minutes in 2013, is now home to over 1 million individuals. In case the reader was becoming concerned, this final piece of our three part series on real estate is not going to analyze the Chinese market, or even America’s hyperinflated northern neighbor Canada, but it will highlight a notion those state planners in Beijing apparently incorporated: if you build it, they will probably come.
The United States has a few recently built ghost neighborhoods, like the busted mansion-strewn $1.6 billion Indian Ridge Resort in Missouri (our ghost “towns” are generally antique and uninhabitable). We do have “ghosted” cities in parts of Detroit, Flint, Baltimore, Toledo, and Gary, IN (derelict homes therein also effectively unlivable). In the current day, however, if something new is built it is virtually guaranteed to be inhabited. As noted in parts I and II, the US has underbuilt homes for more than 15 years, to the point where we sit in a nationwide deficit of at least 9.5 million units. After the Great Financial Crisis developers became risk averse to speculatively building en masse. Thus, the mantra across Manifest Destiny has been: “they come, and then you will build.”
This then begs the question: how accessible will housing be in the future? As alluded to in the last article: it depends… and how quickly are you willing to move? We have two primary sources of procuring housing in this country: buying an existing home from an owner or building/paying for a new home. That’s it. Some may inherit a home, some may have a lovely tent on public property in San Francisco or Austin, but for the purposes of analysis those lucky folks are negligible. So, let’s start with a look at current inventory for sale.
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