We are in the midst of a paradigm shift in the housing industry.
THE REALLY OLD: Homes used as shelter
THE OLD: Homes used as ATM's
THE NEW: Home sitting vacant
Since we are headed down this path, thanks to recent economic woes, lets examine a history of homes and what they have meant to us as human beings. Perhaps that will help us put things in perspective and remember why we came to value the ability to own our own homes. Homes weren't always personal ATM's and we didn't always buy homes for the sole purpose of getting rich. We are, in a way, going back to our roots in terms of housing.
In years past, our ancestors created shelters out of whatever raw materials were available to them. Their sole purpose: protection from the elements. They obviously didn't have the amount of material possessions we do now so security was not a necessary function of their dwellings. The oldest known human dwelling was discovered in 1965 near Kiev, Ukraine. It is believed to be 12,000 years old and made of mammoth bones likely covered by mammoth hides. History is full of stories like this. We all have heard of the cave dwelling people of ancient times, we've seen igloos and adobes, and we've seen the ruins of civilizations of yesteryear. Even in the brief history of our nation, early settlers used whatever was available to them to create shelter.
These settlers used anything they could find to construct shanties with dirt floors. There were no rooms, just one open structure and it was probably about the size of a modest bedroom by today's standards. Eventually word began to spread of the efficiency and ease of construction of log cabins. Systems began to take hold and people began to specialize in home construction. As construction took off we began taking pride in the appearance of our homes and property. In the late 1800's we began to experiment with the majestic weed-free grass lawns like the ones typical of the wealthy English. The American home was slowly becoming a status symbol.
Soon cities began to blossom and urban life flourished. It wasn't until after the second World War that suburban America really got its legs. Through federal subsidies being offered for suburban development, homebuilders began constructing relatively large structures that served as a status symbol to people who were desperate to separate themselves from less wealthy urban dwellers. Large developments began springing up and the size of homes continued to grow.
In 1950, the average home size was just under 1,000 square feet while the average household consisted of 3.7 people. Over the next 55 years the size of homes continued to grow but the number of people per household actually began shrinking. By 2005, the average home had grown to nearly 2,500 square feet while the average household had dropped to only 2.6 people. Also worth noting...in 1950, only 1% of homes built had 4+ bedrooms, but in 2003 that number had grown to 39%! So to summarize, we increased our homes by 1,000 square feet, built more bedrooms, but reduced our family size. Wait....WHAT?
Where has all of this left us? Maybe you've heard the stories about large developments of brand new homes being demolished after being turned back over to the bank. You've probably witnessed street corners with a roll-call of real estate companies' directional signs. You've certainly read at least one news story about falling home prices.
By now, we are all too familiar with terms like 'housing bubble', 'foreclosure crisis', 'downturn', 'bailout', and a whole host of other emotionally charged words. Basically, we became much too dependent on our homes as status symbols, as measures of our value to society. We went away from the model of wealth leading to home ownership and turned instead to a model of home ownership leading to wealth. It is the classic rags to riches story that is just inspiring enough to make people do silly things in the pursuit of wealth.
Everyone should have a roof over their head but it isn't necessary that we all own our own roof! Homeownership should take place when you find a community that you believe in, where you see yourself leading a positive, prosperous life for an extended period of time. When we buy homes just to turn a profit, we end up robbing our communities of any positive contribution.
So, once this ugly, greedy chapter of the history is behind us, what will we find in the house of the future?
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