I'm with you, elroy.

Something I realized today about the whole real estate bubble:

Real estate going up like crazy enabled people to borrow against the supposed value of their houses. This in turn provided them with the illusion of an increasing lifestyle, and bought off discontent that would otherwise have occurred due to the complete stagnation of wages & salaries.

In other words, peoples' real incomes didn't go anywhere, but they were able to increase their lifestyles by going into debt, so they didn't feel as if they were getting screwed. But in fact they were getting screwed frontside and backside: by the wage stagnation, and by the debt.

And now all of that is about to come crashing down. At the same time as the present Administration is taking a big hit, and the whole neocon thing along with it. You can guess where that's going...

Time to go underground. Well not literally, but earth sheltered homes, are the only option I see for a sustainable future. Unless a lucky individual happens to live in a more forgiving enviroment. Then one might be able to consider other practical options.

I agree with Grizz. the house of the future is an earth bermed, solar and wood heated house that you would never know is there unless you saw the entrance. Like the hobbit's houses in the shire.

and here it is the super mansion!

http://www.washingtonpost.com/wp-dyn/co ... 01445.html

Insane. 14,000 square feet for a house? Rooms you never even furnish, let alone use?

This reminds of all those huge mansions built around the turn of the last century. Most of them are now either gone or are historic sites, used as museums, because the owners couldn't afford to maintain them.

A lot of them are going to be returned to the bank. Even around here there are a lot of large homes that people are buying on interest only mortgages. That means that they will have no equity and are only paying interest. If they don't go up in value these people have no incentive to continue paying. They'll turn the deed in to the bank and go live in a trailer.

Money thinks the cooling real estate market could cause some suffering this winter:

Feeling the Pain



And speaking of getting poorer...Lou Dobbs is doing a series called "War on the Middle Class." Tonight they covered this story, about falling incomes in Illinois:

Family incomes losing ground

That may be what peak oil looks like, at first. There's jobs, but not good ones. Lower pay, no benefits, worse than the last job you had. The politicians telling you not to worry, you'll get a better job than the one you lost, but such jobs never appear.

The CNN talking heads all expressed astonishment, that people in Illinois are making the same amount they were making in 1989. With inflation, they're falling behind. I have a feeling we're going to have to get used to that.

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The reason for the end of the housing bubble and the ridicules monster home is summed up very well in this article.


http://www.gold-eagle.com/editorials_05 ... 11805.html


Like the estates along the Hudson that were built in the 20’s and 30’s by aspiring entrepreneurs, many of these modern day leviathans will one day soon be empty, window broken relics of a era of insane conspicuous consumption, that the planet couldn’t afford.

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I don't think that a small, well insulated house will lose value. All those people who lose their mc mansions will have to live somewhere. There are lots of houses in small towns that can be purchased for reasonable prices still. They are more like 1200 square feet and have regular sized rooms. They can be heated without bankrupting their owners. They come with enough land to grow a garden or a lawn that you can mow in a few minutes with a push mower. They were a great place to grow up back in the early days of the last century. We're going to be back there, energy wise, soon. The Mc Mansions up on the hills, miles out of town will turn into the houses of the poorest of the poor, and eventually be abandoned.

I dunno. In the Depression, all houses lost value, not just the large ones. I suspect it's city housing that will hold its value best. Poor people who were left behind in the rush for suburbia may now be kicked out by people rushing back to the cities.

Of course, if you have a small house, you have a better chance of having it fully paid for, in which case you don't have to worry about its value.

I have a friend who is trying to sell her small older home now. (I told her to sell sooner, but she insisted on fixing it up first.) I don't think she's going to get what she's asking. There are 400 homes for sale in the same price range in her neighborhood. No one wants older homes these days, because they are not as energy-efficient.

Small older homes can be made almost as energy efficient as anything built in the 1960's. They weren't thinking of saving energy back then. It is hard to insulate an older home. Practically the only time is when putting new siding on. You can add a layer of insulation to the outside shell. Or have that stuff pumped into the walls.

I think that older houses in walkable neighborhoods will get a second look. People have to live somewhere. They need to be closer to their work. Work is in the towns. They'll move. I was talking to a guy who was spending $130 a week commuting from 40 miles away. He moved to town. People will get it.

Yes, I think people will move closer to the cities, at least temporarily. But that will likely mean apartments and condos rather than houses. At least, most of the houses in my city have split into smaller apartments.

People do have to live somewhere...but that doesn't mean they have to buy a house. There's room for a lot of demand destruction, IMO. In other countries, you'll have families of a dozen or more, living in one small apartment. Here, we have laws setting limits on the number of people who can live in a residence. I suspect those will be rescinded pretty quickly when TSHTF, or at least widely ignored.

What do people do when they lose their jobs, can't afford to commute, or lose their houses? They don't buy a smaller house. They move in with friends and family. (I already know some people who are renting rooms from coworkers and only going home on the weekends.)

As it always is with real estate, what's important is location, location, location. Large houses can become multi-family units, if they are in a convenient location...and I suspect many of them will.

I think you may be right, Leanan. People will lose their Mc Mansion and won't have the credit or foresight to buy anything smaller. There are still lots of nice houses here in my town that go for around $70,000. That's not the case everywhere. I think you are right about the big houses getting chopped into smaller apartments. I see it happening already. The really poor are already being evicted. It's sad. Where are they going to go?