Will real estate tank the economy again?
I remember Chip Case, the now retired Wellesley College economist, arguing back in 2006/2007 that the then emerging slowdown in construction and home building would start to take a wider economic toll.
I remember riffing off of it for a column on the Herald's business page, (Sorry, I can't find it now and I'm cheap and don't feel like paying my former employer to dig through the Herald archives.)
Still, it seemed a bit remote - I was still hoping for a soft landing back then. How wrong I was.
Of course, it was a whole combination of factors, many of them tied to real estate, including the burgeoning subprime crisis and the securitization of millions of shaky loans, which came close to plunging us into another Great Depression.
We ended up with the Great Recession instead. And, as luck would have it, we may be staring at Round II right now.
And now the question comes up anew - will a suddenly decelerating real estate market tip us over the edge again.
The Wall Street Journal's real estate blog takes a good look at the rapidly deflating, post-tax-credit home sales market and the wider economic impact it might have.
However, falling home prices and sales are doing far more than just deprive real estate agents of commissions.
Overall construction employment is down nearly 30 percent, while the number of jobs in the home building sector is down by nearly half, The Atlantic notes.
That's 600,000 out of work home builders, and with the drop in housing starts, it's a number that is only growing bigger.
Is it sustainable to have an economy dependent on building homes that no one can afford to buy? No - clearly some painful structural change is needed.
But unfortunately, that is where we are at right now - and it does not look so good.
