More Splendid News for the Economy


The number of people who bought new homes fell for the fourth straight month. Sales this year are on track to finish as the worst on records dating back half a century.

A few corporate tax cuts and privatizing Medicare should take care of this. Let's go!

  • Justin Cohen

    If the economics of supply and demand apply to the housing market, and we keep on increasing the supply of houses (according to the comments we have too many already), and the Baby Boomers are going to move out of houses and into condos or retirement communities (lowering demand) and unemployed folks aren’t buying houses (lowering demand) and folks who think they may become unemployed aren’t buying houses (lowering demand) doesn’t that mean the prices of houses must fall?

    Falling home prices may be good for some (can afford a house now) and bad for others (can’t sell because owe more on mortgage than it’s worth).

    If falling house prices is a problem, perhaps we could redirect our efforts from building new houses to making existing houses more energy efficient?

    I’m just trying to think of ways that home builders can continue to work without building homes that we apparently don’t need. We could use more schools. Perhaps they can learn how to build schools?

    Or maybe they can learn to tend sheep? We’re going to need a lot of sheep to cut the grass of all those unoccupied homes.

    • Brian C

      The vaunted supply-side economic theory holds that supply creates its own demand. How’s that working out, do you think?

      • Justin Cohen

        My understanding of the theory that supply creates its own demand (from reading about out it on Wikipedia just now) is that the supply of products in the aggregate creates demand for products in the aggregate.

        So, if I create a bunch of widgets and people buy them, I’ll now have money to buy some sprockets, which will increase demand for sprockets.

        I further read on wikipedia that if you create too much of one product, such as houses, there will be a glut in the market:

        In Say’s language, “products are paid for with products” (1803: p. 153) or “a glut can take place only when there are too many means of production applied to one kind of product and not enough to another”

        If we’re applying too many means of production to houses, and not enough to other products, we’ll have a glut of houses and no way to pay for them.

        I like the general idea that the supply of products creates demand for other products. If everybody is producing cool things, we’ll all want to buy each other’s stuff. : )

  • Grant Beaudette

    It sucks that so much of our economy is tied to housing. Partly because it’s one of the few things still made in America, (though I know plenty of people who have pre-made houses trucked in from Canada) but largely because it’s treated like an investment that’s supposed to turn a profit in the end rather than simply a place for you and you family to live in.

    Housing and healthcare are the two things that need to stabilize if the middle class is going to survive.

  • morningsky

    Here in Brazil President Lula set a course to build a strong middle class and pull people out of poverty. Current President Dilma has set her sites on eliminating severe poverty. Not that things are perfect by a long shot in Brazil. The economy is booming here. People are buying condos and the shopping malls are packed. Gee, just like Henry Ford figured in 1914 that he needed to pay his employees 3 times the going rate in order to sell his cars. America needs to wake up and look around and see what is working in other economies in the world. I forgot to mention that Brazil is not fighting on 3 war fronts. They are Nation building in their own backyard. They are educating their children. If you test well at the end of high school your education in college is paid for. Education and a strong middle class make for a booming economy. Trust me there are still the super wealthy here as well. They are making loads of money.

    • Justin Cohen

      Sounds good to me. Thank you for sharing. : )

  • Robert Scalzi

    Not really sure what to say about this , but here in California there are more new homes being built than there are people to buy them, it’s been like that since the friggin 90’s and even tho many still sit empty they keep building the damned things, development for the sake of development benefits no one except the corrupt developers.

    • IrishGrrrl

      Robert, we have the same thing here in AZ. It drives me nuts to hear people wailing about falling numbers on new home starts when we have new homes and existing homes sitting empty. We have ENOUGH friggin houses….they simply aren’t affordable. Stop building the friggin things! New housing construction is a shitty stat to base the health of the economy on because they don’t necessarily follow need.

  • missliberties

    Off Topic Here.

    I don’t know how to link videos, but you all just have to see this video on the Koch Bros. It’s amazing.

    Most regular folks would need to understand that Kochs created the Tea Party, but the video is hilarious and clever.

  • missliberties

    The rent’s too damn high! The recent protests in Israel were about the high cost of shelter.

    I personally would be thrilled to see the price of homes go down. Who can afford a house these days. And the rent is too damn high.

    Those on the lower end of the income scale now have to contend with high costs of living, higher costs of shelter, plus if you have kids in school, they will never get ahead without a computer, a cell phone, etc.

    We need ethical businesses to do more networking to help us build strong, more stable communities by creating not just jobs, but good jobs.