We are building a house, and before I even contemplate typing the next sentence I must add that we are not rich. Not at all. Nor am I the guy who can hew his own timbers with a chainsaw and a jig.
The next sentence, then, says that the process of building this house has given me some insights into the construction industry, one of the few remaining viable trades in this country which employs people who are tool smart. Since construction is tied to the housing bubble, and housing remains where most of us hide our great wealth (sic), if you'll follow me below the fold, and endure my usual pointedly pointless rambling, I'll share some observations.
Let me start with why, because I think it matters. We are building a house out in the country, next to the garden we tend on one side, and the orchard we began planting four or five years back on the other side. We are building on land my wife would inherit some day. We moved here from a larger market, and were able to buy our present house without a mortgage. We live frugally, without making frugality a sport, nor a lifestyle. And we benefited from having bought and remodeled a house in an emerging neighborhood. Which is to say there were three crack houses within walking distance when we bought, and none when we left.
(The people next door lived in Section 8 housing, an old shotgun place so dilapidated that they put the coffee table over the hole in the living room floor. They had two large, territorial huskies, and I suspect others who looked at the house when it was on the market drove on. We stopped. My wife liked the house, and I looked at the dogs and the people who lived there and realized that nobody who took such loving care of their animals would make bad neighbors. We were, of course, white people moving into a black neighborhood. We were not...welcomed, exactly...by the older community, who, best we could tell from those who did talk to us figured we were raising property values and they'd sell in time so they could move to a neighborhood the white folks hadn't yet gentrified. I am uncomfortable with that. I wish they had stayed, as we liked living in a mixed neighborhood. But that's not how it played out.)
We are building a house out in the country because we want to live there, and because our 1950s ranch has no insulation in the walls. We seek the most energy-efficient dwelling we can manage, smaller than our in-town house, with the slightest carbon footprint we can manage.
I am sensitive about money because I've been mostly out of work for two years. Well, partially employed. Sometimes a freelancer, still. And because I've always identified working-class, even though it would've been my grandparents who really fit that designation.
To the point, then, Shocko. Points.
(1) One would think, in a down economy which has sunk in particular because the construction industry ground to a halt, that building a new home would be less expensive. With the possible exception of labor costs, we are finding that not to be the case. The materials cost the same, or more than. My strong suspicion is that wood products is managed much like the paper industry was, back when I was in publishing. The megacorps consolidated the paper plants, then shut them down so as to keep the demand curve in their favor. Prices kept going up even as workers kept being fired.
That seems to hold true for every component of our home. Nothing seems to be less expensive than it was before the crash.
But it's no longer in stock. The local big box no longer has dookie in stock. Everything that's not on display on the floor is a special order. And that doesn't mean it has to come on a truck tomorrow from their nearest supply depot. It means it comes, I guess, from the manufacturer with their next delivery, a process which takes many weeks. This is frustrating. It's not yet costing us money, but it may before we're done.
So...new construction costs about what it did two years ago, when money was plentiful, right? Then...riddle me this...
(2) Why is our existing house worth less than it would cost to build? I don't care that it's worth less than it was two years ago. I get that. I should be buying/building in the same market, but I'm not. I ran into one of the local bankers earlier today. He said there have been so few real estate sales in our county that they can't even find comps on which to base loans. And he thought there had been one sale over $200,000 in the whole county for the last eight months. He may be a house or two wrong, but not far wrong.
We are building what we think to be a frugal house, at something north of $100 a square foot. If our present house had that same value, we'd be in great shape. We could even afford solar panels. If, of course, we could sell it. There's the gamble, eh? (We can rent it, and probably cover our mortgage. We think!)
(3) With all this push for renewable energy, with all the concerns about carbon and global warming, with the virtual certainty that we are at or near peak oil, why in the hell isn't the price of alternative energy solutions and components coming down? Maybe it has, some. I haven't followed the market. But it sure doesn't seem like it.
Now, we live on the edge of coal country, and so I'm not surprised the state of Kentucky isn't all that keen on us becoming self-sufficient contributors to the grid. But why aren't the components yet emerging as simple, easy to operate appliances, instead of Popular Mechanics gadgets?
Because, I fear, the demand isn't there. There simply isn't enough demand -- nationally or regionally -- to drive the prices down on things like solar panels. (Again, somebody may know more and be able to correct me on that. But we've been researching this for two years, and I haven't seen the prices change.)
Some of us have the message, or think we have the message. Some of us think, gee, maybe we better start building an ark in which to nurture future generations. But we are a painfully small minority.
We live in a country driven by weekly sales and profit reports. We live in a world groaning under the weight of economic and ecological disasters.
And we do nothing.
There is much chat today about Krugman's column, about where the economy is headed.
What I would say from my vantage point in the hinterlands is that it's headed nowhere good. It still doesn't make sense. It still doesn't reward actions taken to better the world, it still doesn't embolden one to start a new business or hire a new employee or believe that one's children should have grandchildren, much less to believe that such mythical grandchildren (my daughter's seven, OK?) will inherit an earth that is anything short of the dystopias written about at length by the hysterical left and right.
There are no new jobs. There aren't going to be any new jobs. The stock market has nothing to do with the world in which I live, but everything to do with the puppet masters controlling the world.
It's enough to make a life-long pacifist contemplate that shotgun in the window.