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The predicamentCould the time be ripe for innovation using prefabricated materials such as shipping containers?
I think it is easy to argue in the affirmative.
High PricesWe are all users of housing. We must all pay for it either through rent, a mortgage, or cash. But in the USA, home prices have been rising well above the rate of inflation for over 20 years. In the 1990's house prices were costing 3 to 4 times the replacement cost, according to one expert. The result is that in the US even many two wage-earner households can hardly afford a conventional home.
Low/No WagesPrices are unreal, but the economy is worse. Wages have been stagnating for a long time. But now, jobs have become much harder to find and retain. Since 2001, 3 million jobs have been lost. Around 1.7 million of those jobs have left the US economy entirely. More are expected to leave: for instance much is being said in the media about how non-specialist jobs involving computers, from high-paying programming to mundane customer service, are slated to go overseas in the next few years.
Dell Computer for instance just moved its entire technical support operation to India (see this, that, even this). Reports that the economy is growing are being dismissed by economists: it is explained that there are fewer workers working, but that they are working much harder than ever to keep their jobs. They term this a "jobless recovery". Deflation and recession are predicted.
Destruction of middle classCompanies that have fired US and other Western workers in order to shift jobs to India, China, Russia are very numerous. We are really seeing the gutting of the middle class in America and the expansion of the lower class. This fact, and the fact that credit is hard to come by, raise the question of whether Americans have the ability to pay for the lavish $250,000 homes of just a few years ago.
Speculators perpetuating the scamHousing speculators have begun destroying unsold, empty houses even while they refuse to lower prices or rent out vacant homes to desperate Americans. The reason is clear: Speculators want home prices to remain high, and a glut of empty homes risks to bringing prices down. So they are simply tearing down houses, no doubt with the hope that they can get the taxpayer to cover their losses.
Result AAlthough builders, architects, and real estate agents are profiting from the real estate boom, it seems clear that falling wages and overpriced homes mean the party will soon be over and indeed the news reports echo this conclusion.
Result BIt is also no surprise that consumers are actively looking for cheaper options. But will they become aware of the possibilities of prefab materials such as shipping containers?
These links are a few years old.
- USA Today: consumers heightened concern about the housing market
- Newsweek examines the basic predicament of homebuyers in the USA
- US Census: median/avg house prices annually and monthly
- My own analysis based on the data: housing price increases vs. inflation
- BBC story The looming housing crisis
- BBC story (dated 2002) Record leap in house prices
- BBC story (dated 2003) House price slide continues
- National Association of Realtors: median metropolitan house prices
- AP story Rents up over 1/3 since 1999
- US Census: Housing costs to renters
- USA Today: Housing market sturdy but vulnerable
- Jobs and Economy
- GPEC: US inflation rate statistics
- Intel Corp founder Andy Grove calls for government intervention
- CNN: Tech jobs leave U.S. for India & Russia
- Graph of unemployment rate
- Graph of CPI (Consumer Price Index)
- US Dept of Labor's Employment Cost Index
- Economic Policy Institute: State by state low-wage workers hit hard
- EPI: Pulling apart: a state-by-state analysis of income trends"