Moon of Alabama Brecht quote
September 18, 2008

Housing Crisis: Creative Destruction Can Help

Thinking about a solution to the housing mess I had been playing with this idea for a while:

Here is one government program to fix the housing crisis:  buy and destroy homes.

While I did some math on this, I never wrote about it. Now Fabius Maximus makes the argument.

The core of the housing crisis is overbuilding, which has created an excess supply of housing units (broadly defined).
Many vacant homes will be destroyed, the fast track to fixing this problem.  Empty houses get vandalized, destroyed by the owners (spite or insurance fraud), occupied by squatters or meth labs, or wrecked by the forces of nature.  In regions with net out-migration (e.g., Detroit) homes remain vacant for long periods, often abandoned by their owners (valueless but costly due to taxes and maintenance).  As anyone familiar with the history of the South Bronx knows, empty homes acts as an infectious blight that can devastate larger areas.  After a decade or two, the result can look like Dresden after the bombing in 1945.

There are excess houses on the market. These houses will decay without occupation and lead to slums. This will be expensive for their owners as well as for the communities, i.e the taxpayers.

Further these excess houses depress prices and they are the reason why the decline of house prices will go much further than necessary. Without supply destruction the prices for houses will be lower after the decline than before they bubbled up because of this excess supply.

So how much would the taxpayer have to invest to get rid of them?

According to the U.S. Census Bureau there are some 130 million houses in the U.S. but only 111 million are occupied. 14.6% are not occupied.

Here are the vacancy rates for rentals and for 'owner occupied' units:


The graph shows how the Rental Vacancy Rate (pink, left scale) jumped from some stable 8% in the 1980s and 90s to 10%.  The vacancy rate of 'owner occupied' units (blue, right scale) jumped from a long term 1.7% to 2.7%. There are simply too many houses.

To bring the vacancy numbers back to normal levels the excess supply, according to my calculations some 1.1 million of rental units and some 815,000* of 'owner occupied' units are excess, will have to be destroyed. (People who can not afford to own, will move back to rental units. So in reality one would destroy 1.9 million 'owner occupied' units and the rental excess would be diminished by people moving.)

The U.S. could easily buy the total of 1.9 million units and depose them. It could buy whole suburbs and tear them down. At a $100,000 average price per unit the current owner or mortgage holder would likely make a big loss so there would be no moral hazard.

The total price for the taxpayer would be $190 billion - i.e. small change in light of recent Treasury and Fed operations. Throw in a few billions for the current jobless craftsman who can tear those down and turn the energy wasting suburbs back into fields.

To do this will likely be cheaper than to take care of the consequences of decaying houses and a deeper fall of house prices and rents as necessary.

* numbers corrected - see the first comment

Posted by b on September 18, 2008 at 15:09 UTC | Permalink


Detail on the math I did (and corrected):

- Table 1 and Table 4 from
- T1 gives the historic and current vacancy rates.
- T4 gives 'Estimates of the Housing Inventory'.

- the rental vacancy rate is 10% instead of a historic 8%
- the 'owner occupied' vacancy rate is 2.7 instead of a historic 1.7

- rental units occupied are 35.5 million; adding 10% vacant to the occupied 90% the total is 39.5 million; at 8% vacancy the total would be 38.4 million; ergo 1.1 million excess.
- owner occupied units today are 75.7 million units; adding 2.7% vacant to the occupied 97.3% the total is 77.9 million; at 1.7% vacancy rate the total would be 77.8 million; ergo 810,000 excess.

Posted by: b | Sep 18 2008 15:18 utc | 1

@ b

have u checked the homeless population in the us? would'nt it be great for the market if all the population got converted to the homeless status?

Posted by: a | Sep 18 2008 15:25 utc | 2

@a - I don't get that question.

Posted by: b | Sep 18 2008 15:35 utc | 3

the idea sounds a lot like a war zone, the current fashion of the US and allies in urban development worldwide

Posted by: constant | Sep 18 2008 15:36 utc | 4

The vacant house supply destruction thesis will be self-solving. If you talk with folks living outside the city limits of police jurisdiction, the outlying subdivisions are being prowled at night by "recyclers", and that's the nice word for house trashers who kick in the door, strip out everything that can be salvaged without destroying it, sinks, toilets, marble countertops, cabinets, all the electrical wiring, light fixtures, some have even torn the sheetrock off the walls and sawed out the copper plumbing. A friend in the SW tells of families huddling in their houses at night, father away in the city or another state looking for work, wife and kids with blankets pulled up and all lights on, while outside their windows the "wrecking crews" of meth addicts are kicking in the doors on both sides of their house, godawful noise of wrecking bars and breaking window glass and fixtures being dragged to the street. Those that haven't been trashed yet, folks I've talked to say, aren't being heated or air conditioned, so are already haz-mat black mold dumps, requiring air suits to enter, never to be sold, never to be demolished because that costs money too, and counties are broke. No, the "bulldoze excess inventory" thesis wasn't just a cute twist of phrase, the problem is real, a cancer, a tooth rot, a disease, most likely will be solved by massive-scale arson once the owner's are safely out of town. Just leave a pile of polyester clothes in the garage with a space heater parked a bit too close, gives you hours for a getaway, but with volunteer fire departments folding left and right for no money, that single house arson here and there would probably end up burning entire subdivisions down, good houses and vacant.

Posted by: Terra Bula | Sep 18 2008 16:00 utc | 5

The usual problem though: who gets to decide, who gets paid and how. Do you see your demolition program proceeding without political fighting?

Posted by: rapt | Sep 18 2008 16:00 utc | 6

Two years back or so there was real worry that cities did "creep" outward, ever bigger homes with generous allocation of lawn replaced farmland, forest, nature...

Assuming that the owners who fail to pay the mortgage are more or less evenly distributed, above problem would not be solved: Instead of a "tidy" suburb it would contain holes (one every 20 or 30 houses).

Is the distribution of really halfway eben, or are there surburbs which contain a significant amount of empty houses? If yes, what would be the reason for this?

To pull the two threads together: Is it possible to modify b's program in a way to reduce the space allocated to cities, and get more land in a halfway natural state back?

Posted by: No So Ana | Sep 18 2008 16:48 utc | 7

Isn't this a version of Keynes's (tongue in cheek) solution to the depression? - pay half the unemployed to dig deep holes and pay the other half to fill the holes up again. Solves the unemployment problem and gets money circulating therough the economy again.

Course, t'would be an idea to employ the air force to bomb the suburbs - they are good at that - plenty of experience in Iraq, Afghanistan etc - and it would give 'em summat to do. And justifies the expenditure of vast amounts of taxpayers' dosh on defence. Employ the air force to bomb the suburbs, then pay lots of other blokes to rebuild the homes. Keynesian solution to crisis.

Posted by: drongo | Sep 18 2008 16:51 utc | 8

No So Ana,

Well, I think b has the right idea, but his explicit solution will never be accepted. In the least, though, a moratorium needs to be put on further building until excess supply approaches zero. In the meantime, Federal Legislation needs to be passed that requires uniformity in Urban, and Non-Urban Planning. The process as it stands today is not a process at all. It is highly fragmented and inconsistent from state to state. The counties and cities decide what gets built, and what doesn't, and they are all pretty much bought and paid for by the developers.

Of course, none of what I said above will ever happen. It will end up increasingly looking like a war zone, similar to New Orleans. New Orleans is the shining example of things to come. New York City is next.

Posted by: Jane Jacobs | Sep 18 2008 17:06 utc | 9


Does that mean we will have two pots in every chicken?

Posted by: Foghorn Leghorn | Sep 18 2008 17:12 utc | 10

Yes! We'll launch a War on Housing!

War is how Americans approach the subtle art of problem solving, both at home and abroad. With a sledgehammer, with shock and awe. Declare war upon it, have people run around in circles, accomplishing nothing, while all profits are shuttled to the top few wiseguys who have the inside track on the whole program.

These scams are called War On Poverty, War on Illiteracy, War on Drugs, War on Immigration, War on Terror, and there will soon be declared a War on Global Warming.

They are called Wars in Washington. They are called Bubbles in New York. They are called Foreign Policy beyond our borders.

I still prefer the Mafia's term -- "bustouts."

Posted by: | Sep 18 2008 17:32 utc | 11

Whats happening in State Street Bank?
I dont understand anything.

Posted by: timid | Sep 18 2008 17:36 utc | 12

@No So Ana - Two years back or so there was real worry that cities did "creep" outward, ever bigger homes with generous allocation of lawn replaced farmland, forest, nature...

Assuming that the owners who fail to pay the mortgage are more or less evenly distributed, above problem would not be solved: Instead of a "tidy" suburb it would contain holes (one every 20 or 30 houses).

The bad mortgages are not evenly distributed. There are Suburbs with 70% failures. Those 30% left there would hopefully ask to be bought out. If not - eminent domain(?) and compensation.

Is the distribution of really halfway eben, or are there surburbs which contain a significant amount of empty houses? If yes, what would be the reason for this?

Social alignment of classes.

To pull the two threads together: Is it possible to modify b's program in a way to reduce the space allocated to cities, and get more land in a halfway natural state back?

Yes, I think it is - it would be a lot of trouble with libertarians etc, but I could help counties etc. get through the slump.

The crisis has only started. Imagine how the empty houses will look when the municipals put off policemen and firemen during this downturn. Patrolling five suburbs requires more than patrolling three or four. So shut down one and concentrate the people.

I am sure it will be worth the money. Much cheaper than all these bailouts (which also only started).

Posted by: b | Sep 18 2008 17:42 utc | 13

Because burning crops worked great to cure the food shortages during Great Depression. Not only will people become unemployed and poor, but they'll also have to pay higher taxes on the homes they do get to keep! And that's not even considering that new home buyers will need to pay even more money for a home.

If that worked, then governments should just hire everyone, and have them perpetually dig up and fill back holes in the ground. That will drive the economy, right?

Isn't this just a fancy suggestion to bailout of financial companies, at taxpayer expense? After all, you should ask who benefits most from having high-priced loans paid back.

Vacant homes will be rented, once it becomes clear that they won't sell. That will lower rents by increasing the supply of rentable property. Aren't lower rents something good for the less affluent?

Posted by: | Sep 18 2008 17:54 utc | 14

what i meant to say was what is the correlation (if any) between the number of homeless people and he number of empty houses in the us. not that such a correlation would prove anything. just an interesting statistic bit to keep in the head.

Posted by: a | Sep 18 2008 17:54 utc | 15

Why destroy? Empty lots won't improve the neigborhoods! Just keep them off the market for a while, sell them later when the serfs can take up debt again. Meanwhile, just make 'm look as nice as the rest of the place.

Posted by: DharmaBum | Sep 18 2008 18:12 utc | 16

Empty lots won't improve the neigborhoods! Just keep them off the market for a while, sell them later when the serfs can take up debt again.

Better an empty lot than a half burned down meth lab ...

The future costs of the empty lot are much less.

Posted by: b | Sep 18 2008 18:47 utc | 17

A point which might help explain b's argument is that, for us Europeans, housing in the US has always been relatively easy. There is plenty of it. The issue is cost, and to a degree, location. Location has played a minor role until now, because of the low price of gas, but will change. Quite different in Europe. Housing is a higher proportion of income and less easy to find. b would not propose this argument in Europe; there are no houses available to demolish.

Posted by: Alex | Sep 18 2008 18:52 utc | 18


Perhaps the dolts in the 3rd Infantry Division’s 1st Brigade Combat Team can help in the effort since they're being deployed stateside shortly.

The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.

It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas.

But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

After 1st BCT finishes its dwell-time mission, expectations are that another, as yet unnamed, active-duty brigade will take over and that the mission will be a permanent one.

“Right now, the response force requirement will be an enduring mission. How the [Defense Department] chooses to source that and whether or not they continue to assign them to NorthCom, that could change in the future,” said Army Col. Louis Vogler, chief of NorthCom future operations. “Now, the plan is to assign a force every year.”

The command is at Peterson Air Force Base in Colorado Springs, Colo., but the soldiers with 1st BCT, who returned in April after 15 months in Iraq, will operate out of their home post at Fort Stewart, Ga., where they’ll be able to go to school, spend time with their families and train for their new homeland mission as well as the counterinsurgency mission in the war zones.

Stop-loss will not be in effect, so soldiers will be able to leave the Army or move to new assignments during the mission, and the operational tempo will be variable.

Don’t look for any extra time off, though. The at-home mission does not take the place of scheduled combat-zone deployments and will take place during the so-called dwell time a unit gets to reset and regenerate after a deployment.

The 1st of the 3rd is still scheduled to deploy to either Iraq or Afghanistan in early 2010, which means the soldiers will have been home a minimum of 20 months by the time they ship out.

In the meantime, they’ll learn new skills, use some of the ones they acquired in the war zone and more than likely will not be shot at while doing any of it.

They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.>Entire article


Posted by: Buck Turgidson | Sep 18 2008 19:03 utc | 19

This is just plain silliness. You can’t really be serious?

Posted by: Spyware | Sep 18 2008 19:22 utc | 20

Yes. This can work.

We just need to be sure to shoot the people who live there, too. And burn their cars, and crops, and put salt on their fields, and make damn sure no stone is sitting on top of another stone.

It's a bit Roman, I admit, but look how well it worked for previous Reichs.

Posted by: Antifa | Sep 18 2008 19:34 utc | 21

GOP = Genocide Our Planet.

Posted by: | Sep 18 2008 20:03 utc | 22

@Alex - b would not propose this argument in Europe; there are no houses available to demolish.

Some East German counties are doing what I proposed - destroy empty house that have no chance to be bought or rented because of population flow. It is cheaper than keeping them up. That will be the solution for the recent over-build in Spain too. Not so much in the UK and Ireland yet, but the problem is not the same everywhere.

@Spyware - You can’t really be serious?

Like usual you are offering a silly unfounded remark instead of an argument - not that I expected anything different - but please spare us such a waste of electrons.

@all - What I and FM propose is a buyout, which can be modified for this or that, to lower the total costs the community (taxpayers) will have to carry anyway. That can be argued on several reasons. But polemics are not an argument.

Posted by: b | Sep 18 2008 20:03 utc | 23

Well, I was just coming here to point what No So Ana said.

This won't work as well in Europe for an obvious reason: densities are way higher, there's a bit less creeping sprawl and McMansions in the countryside.

But to do this the right way, you'd need the government to exerce its full power and authority over private owners. Then, check the amount of housings for your entire population - no reason not to give a home to the homeless -, and to decide how many squ meters are enough for people. Then just go on and bulldoze the areas with the tiniest densities, and at long last bring back the people in the cities, where they won't need to drive as much, because they'll be closer to offices, shopping malls, theatres and the like, and of course because higher densities in US downtown means mass transportation becomes realistic.

Of course, this is something so contrary to American way of life and to most people's dreams and delusions that not even Roosevelt at his peak could have pulled it off.

Posted by: CluelessJoe | Sep 18 2008 20:25 utc | 24

Demolishing by city gov of abandoned residences has been going on in Buffalo, NY, my hometown. Didn't find a link quickly to city program, but thought some here might find prices on this link interesting. It's a great town if one's gainfully employed, which also means it's a good place to open a business.>

Posted by: plushtown | Sep 18 2008 20:25 utc | 25

@ 19

A bump for this post - it's interesting. A Brigade Combat Team, fresh from active duty, deployed in the homeland and trained in crowd control?

I mean, come on...

Posted by: | Sep 18 2008 21:02 utc | 26

And if we don't have enough construction workers on hand to tear down vast tracts of vacant McMansions sitting out in the middle of nowhere, we can always recruit our soldiers returning from Iraq and Afghanistan to help tear them down as well.

Plus this would be a great way for our soldiers to keep their skills of destruction, creative or otherwise, up to snuff.

Then once these tracts of land are free of McMansions, we can turn them into vast network of victory gardens -- minus the seeds of destruction, of course!;^)

Posted by: Cynthia | Sep 18 2008 21:26 utc | 27

Me at 26...

Posted by: Tantalus | Sep 18 2008 21:39 utc | 28

And further, Cynthia, Depleted Uranium makes great fertilizer. You can grow pumpkins the size of VW Bugs. Sure, your kid may be born with only a brain stem, or some extra digits, or a hand growing out of her forehead, but at least they will have plenty to eat.

Posted by: DU | Sep 18 2008 22:41 utc | 29

Sounds to me the US has the housing problem for immigrants knocked, you know, the immigrants US policy created with NAFTA and the occupation of Iraq.

Posted by: IntelVet | Sep 19 2008 0:14 utc | 30

Spyware, welcome to the brilliant solutions of MoA.
IntelVet nails it. House the homeless, the refugees from Iraq and Afghanistan, and throw the $190 billion at them.

Posted by: waldo | Sep 19 2008 2:01 utc | 31

waldo: for someone who advocates the mindless, monochromatic sloganeering of the democrats as the solution, you're derision of this forum, like your naive advocacy of Obomb, continues to be hilarious.

if so many of the houses built during the inflation of the housing bubble weren't shoddy, disposable structures which reflect the throw-away cultural ideals of a highly mobile, careless, and arrogant first world nation, i'd say b's "solution" is extreme. but they are, so why not?

innovative ideas are out there; we really could build more efficient, sustainable structures if the will existed. so many houses are energy sinks, inefficiently built, and in that regard a threat to our national security. maybe amerika should wage a war on stupid, outdated construction techniques, and really start implementing concepts that will have an actual impact, like gray water systems in every house, for starters.

so don't knock something you obviously don't have the imagination to understand, waldo. creative destruction could be an interesting facet of the coming paradigm shift. really, a lot of that obnoxious suburban sprawl shouldn't have been frantically built in the first place. tearing down what wasn't built to last in the first place really isn't such a bad idea.

Posted by: Lizard | Sep 19 2008 5:20 utc | 32

Lizard, I'm really impressed by your opinion and I'm sure it's only a matter of time before you achieve brilliant success at something or the other. That is, when you grow up.

As for burning down neighbourhoods, sure, brilliant, whatever. Don't vote, wait for the 'paradigm shift' so that you can indulge in some 'creative destruction'. "maybe amerika should wage a war on stupid," starting with teh MoA 101st anarchical keyboarders creative to the point of lunacy solution committee.

Posted by: waldo | Sep 19 2008 9:52 utc | 33

Bright Side of a Total Financial Market Collapse: Michael Lewis

...A lot of attractive office space seems to be opening up in midtown Manhattan, for instance, and the U.S. government is now getting paid to borrow money. (And with T-bills yielding 0 percent, they really ought to borrow a lot more of it, and quickly.)
...1) We finally get to see what's inside these big Wall Street firms.
...2) We are creating the financial leaders of tomorrow.
...3) Ordinary Americans get a lesson in low finance.
...4) We have lots of new houses.
...5) Huge numbers of Wall Street executives will have the time to raise their children.For years now Wall Street has been far too lucrative for a certain kind of energetic and ambitious person to justify anything but the most perfunctory personal life. Now that the market for his services has collapsed, he has time to go home and figure out which of the children roaming around the mansion are actually his.

Posted by: vbo | Sep 19 2008 10:05 utc | 34

You can’t really be serious? You REALLY can’t really be serious? You really need someone to deconstruct 'creative destruction'. If this is not a put-on, and you really need an 'argument' rather than 'silly unfounded remark(s)' - there are a number who will oblige in you can spare the electrons.

But, then again, I'm still not convinced that this is not an oblique attempt at satire.

Just where have I heard the term 'creative destruction' before?

Posted by: DM | Sep 19 2008 10:19 utc | 35

Slightly OT, but financial news.

Fireworks over at The Big Picture. It might be that asymetric warfare might be more than a bunch of guys with IED's.

Last night, we discussed the absurdity of banning all short sales. The details of the SEC action have been released (see below). The specifics are a "temporary halt in short selling in 799 financial institutions" until October 2nd.

The bear raids on the banks and brokers were NOT a case of piling on by US based hedge funds. And from what he was seeing and hearing about in terms of order flow, the vast majority of the financial short selling the past week or so were being done overseas.

Then there is another coincidence: The huge increase in shorting of the financials occurred on the anniversary of 9/11. And on top of that, the same institutions attacked on 9/11/01 were the ones suffering in recent days.

Joe asked the question: Is anyone investigating whether this is a case of financial terrorism?

The whole article is at the link

Posted by: DharmaBum | Sep 19 2008 11:41 utc | 36

@DM - You can’t really be serious?

I am serious. Some recent press reports might explain why:
Squatters in abandoned homes raise fears among East County Realtors

During the Labor Day weekend alone, Amodeo said, she entered four houses to find destruction or signs of squatting.

"It's absolutely absurd. Theft and vandalism and squatters. It's all over the place. The holiday weekend was the worst," she said, armed with a canister of pepper spray on a visit to one house. "I'm not trying to be a vigilante. I'm pretty tired of going into these houses and wondering. We don't know what's on the other side of the door."

Realtors say the problem festers in Bay Point, Pittsburg and Antioch, communities hard-hit by a foreclosure epidemic that shows no sign of abating. The results in Antioch are stark: Of the 944 homes actively on the market last week, more than 850 were either bank-owned or short-sale homes.

Abandoned houses don't pay taxes, but cost the communities a lot of money. Buy 'em up and tear them down.

St. Paul in Minnesota is already doing this:

St. Paul's plan for empty houses

"When you drive down that street, it impacts your feeling of safety," she said. "It impacts neighbors' desire to put more money into their own home if they see the neighborhood declining. And the community as a whole, if foreclosures lead to more vacant houses, that's fewer folks who are shopping at our neighborhood commercial outlets and those neighborhood businesses suffer as well. So there's a significant domino effect."

City Hall wants neighborhood district councils to identify which blocks to focus on first. Some groups are most interested in pockets near schools, playgrounds and senior centers. These are areas where clusters of vacant properties, if left alone, could pose the biggest risk to vulnerable neighbors.

Bedor says the next question -- whether to rehab or demolish -- is a huge undertaking.
Bob Kessler, director of the city's Department of Safety and Inspections, says his office spends a lot of time trying to track down property owners. But when certified letters go unanswered, sometimes the city needs to make a call.

"Finally, two weeks after the property's been demolished, they call to find out what the status of their property is," Kessler said. "And our response is, 'Do you know the directions on how to get to the Pine Bend Landfill? Because that's where your property is.'"

Dayton's Bluff developer Jim Erchul said some homes are beyond repair. ...

It sounds radical, but when you think about it it is a solution that helps to clean up the markets and to shorten the slump.

Posted by: b | Sep 19 2008 11:42 utc | 37

and to shorten the slump.

It's more than a slump, though, b. There's a permanance to what we are seeing unfold. The halcion days are done, once and for all.

Posted by: Delano | Sep 19 2008 12:10 utc | 38


They may be doing this in the inner city, but you'll be hard-pressed to find an example in suburbia, which is where the bulk of this mess resides. You will have to go county by county, and small city by small city, and the liklihood of all of them, or even a majority doing it is improbable unless they're forced to do it by decree.

Posted by: Lyndon | Sep 19 2008 12:14 utc | 39

You will have to go county by county, and small city by small city, and the liklihood of all of them, or even a majority doing it is improbable unless they're forced to do it by decree.

Yes, county by county, and eventually they will be forced to do it by reality, not by decree. If people walk away from their property and stop paying taxes on them the pressure will be on the counties to demolish those housings after they turned to wreaks and have drawn down the neighborhood.

To give the counties the money now to run this program now in a sensible way would prevent the negative consequences of empty houses.

Posted by: b | Sep 19 2008 12:48 utc | 40


I think that you may not understand American culture, especially when you get out of the cities.

Posted by: Lyndon | Sep 19 2008 13:23 utc | 41

Waldo, fact is that modern (conventional) construction standards are so piss poor that if left empty for surprisingly little time they start to rot. This has been well-documented and reported upon. If you don't live in the US, you might not be aware of the scale of this problem. Great swathes of speculative building will, at some point soon, become unfit for human habitation due to mold, outgassing from materials, moisture...

Posted by: Tantalus | Sep 19 2008 13:46 utc | 42

A view from within the US house construction industry: b’s proposal is reasonable and may be helpful. There is another insurance crisis going on as to whether homes at risk can and should have homeowner insurance. After hurricane Rita following Katrina hit Texas, the Texas insurance board sought to allow insurance companies to deny coverage to certain at-risk coastal properties. Rich property owners on the coast got that measure overturned. The most recent hurricane may mean little or no rebuilding of Galveston this time around.

Housing in the exurbs is at risk as well, though in a different way. Meth usually moves from rural areas into the exurbs. I’ve seen one development in North Dakota a few years ago taken down by mold complaints then arson then meth then total abandonment. These exurb developments were a stretch anyway for utilities and services; they arose due to high-handed pressure on matters such as impact fees applied by the National Association of Home Builders. Towns and cities may begin to consider de-annexation, though it will be a hard sell as long as some property tax revenues are coming in. A federal program that buys outlying property (perhaps uninsurable) for re-conversion to farmland would allow towns to re-consolidate and fill vacancies closer to the center. Insurance companies already calculate premiums as a function of fire company responsiveness. The historic preservation people do scavenging of property to be demolished, and such programs could be expanded. Then we realize how much of US housing has no scavenged value: shingles, OSB, trusses, drywall, carpet, vinyl siding, concrete, probably half the total mass at least. Sad.

Posted by: Browning | Sep 19 2008 14:07 utc | 43

Look, it's not just the houses. There's road, electricity, water and plenty of other infrastructure involved, that don't just appear. If there was any real imagination going on here, we'd be looking to utilise already existing resource to improve social and community standards by housing the citizens who have been defrauded by this administration, especially the vets of this and other wars, and the homeless, the unemployed, the infirm and the old. This in turn demand further social infrastructure involving trades and social bureaucracies.

What that takes is BIG GOVERNMENT. Big, responsible government. Government that administers for the benefit of the whole country, and ALL of the people. Government that will finish the current warring, re-regulate business, clean up the justice system and run America as a community instead of a business.

Which is exactly what Barack Obama has been describing in every speech he's made. But some people here won't vote for Obama and want to knock houses down.

And that is because, understandably, you've lost faith; in your political system, in your political representatives, in humanity.

I urge the members of this site's community to put aside their cynicism, no matter how logical; to put aside all other priorities, to take a leap of hope and Vote Obama.

Posted by: waldo | Sep 19 2008 14:30 utc | 44

I think it sounds like a reasonable proposition. Certainly a better way to spend a couple of hundred billion dollars than throwing it away on banking behemoths who will never give any return on the investment.

It's more than a slump, though, b. There's a permanance to what we are seeing unfold. The halcion days are done, once and for all.

I know fatalism and belief in poetic justice are attractive. Who cares? It ain't over til it's over.

Look, it's not just the houses. There's road, electricity, water and plenty of other infrastructure involved, that don't just appear.

Bulldoze the lot of 'em, at least when it comes to the ones leading out to all those completely un-self-sustaining exurbs. Which will be dying soon no matter what anyway unless car fuel gets cheaper.

Posted by: Quin | Sep 19 2008 14:35 utc | 45

Well, there are also other reasons for "Creative Destruction".

From :

Nassau County officials are looking at what might seem like an improbable link between the mortgage foreclosure mess and the surge in West Nile virus this year in the central area of the county.

David Pimentel, professor of entomology at Cornell University in Ithaca, said there was no doubt of the link between foreclosed homes and West Nile.

"Definitely. There is no doubt. The problem is going to occur where you have stagnant water, and that's what you're going to find around foreclosed homes, unattended for months at a time," Pimentel said.

Posted by: DharmaBum | Sep 19 2008 14:40 utc | 46

Waldo, I will vote for Obama if, and only if, he eschews all corporate and special interest funding, including the $10 million, and counting, from Wall Street.

Posted by: Onyango | Sep 19 2008 17:11 utc | 47

I know fatalism and belief in poetic justice are attractive. Who cares? It ain't over til it's over.

It's called realism and honesty, Duke. The tremendous growth and prosperity of the past century was fueled by cheap energy. Those days are gone, and so too, by default, are the growth and prosperity.

Who cares? I do, that's who, and until you're honest about what's ahead, you obviously don't care as is winessed by your head in the sand, or up your ass like so many other Americans.

Posted by: Medicine Woman | Sep 19 2008 17:18 utc | 48

There were four families living in the last house I lived in before I left the US, it was built to be a two-family. The landlord was getting about $5K/mo. This was 40 min north of NYC, two miles from the metro north railway. I don't know where that fits into this theory. I think that the two immigrant families living in the basement would have liked to live in one of these OSB-shacks that I read about, too bad the owners don't sacrifice them early enough to bring in some de facto security guards. Maybe the lack of local oversight by a local mortgage-holder is contributing to the failure of owners to go into fire-sale mode. just anecdotes.

Posted by: boxcar mike | Sep 19 2008 18:39 utc | 49

For al,

"Terror, terror, terror, terror, terror. I would say to John, 'Let me put it to you this way. The Lord Almighty, or Allah, whoever, if he came to every kitchen table in America and said, "Look, I have a Faustian bargain for you, you choose. I will guarantee to you that I will end all terror threats against the United States within the year, but in return for that there will be no help for education, no help for Social Security, no help for health care." What do you do?' My answer is that seventy-five per cent of the American people would buy that bargain."

—Joe Biden, in The New Yorker, on what he would say to John Kerry

here's your cherished dems ...

Posted by: Uncle $cam | Sep 19 2008 19:38 utc | 50

someone referenced--i believe it was Gaienne--(spelling?) the collapse party. i think it's time, especially for amerikans, to accept the inevitably of collapse, and prepare accordingly. either we take the initiative to restructure our own communities, or they will be restructured for us to ensure perpetual enslavement.

you better believe the perpetrators of these massive crimes of illegal war and economic manipulation are prepared. the Bushes will flee the country they've helped wreck to their extensive land holdings in Paraguay. they'll have nice homes and an aquifer while the rest of us slide into the new dark age.

Posted by: Lizard | Sep 19 2008 20:08 utc | 51

#51: new feudal age, for those not drowned, 1918/bird flu-ed, or disappeared.

Posted by: plushtown | Sep 19 2008 23:39 utc | 52

The U.S. could easily buy the total of 1.9 million units and depose them. It could buy whole suburbs and tear them down. At a $100,000 average price per unit the current owner or mortgage holder would likely make a big loss so there would be no moral hazard.

How about putting homeless veterans or disabled veterans or people qualifying for public housing in there ... deposing of housing units like deposing of useless men to society? ... bulldozing ... third world racist dictatorships do that kind of stuff ... oh, wait

Posted by: mimi | Sep 20 2008 4:28 utc | 53

Idiots! Everyone knows you don't bulldoze houses. You allow entrepreneurs to remodel them into marijuana grow-ops, netting nice profits for growers, sellers, and the utility companies, while significantly reducing the trade deficit with Canada. With some aggressive international marketing maybe the US could even become a pot exporting country! Plus, the houses end up becoming uninhabitable anyway, so the overbuilding problem is solved. Why can't people see the obvious solution right in front of their faces?

Posted by: the exile | Sep 23 2008 18:27 utc | 54

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