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The self-destructive notion of stopping new home building

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POSTED August 10, 2009 2:03 a.m.

It’s time for all of us to grow up especially folks who believe that new housing construction must stop as society somehow has an obligation to prop up the presumed value of their homes.

Not only is it self-centered but it is self-destructive. Pulling the plug on new home construction at this juncture would be akin to stabbing oneself repeatedly in the stomach until you collapse. Stopping home construction would not be an act of self-preservation. Instead it would just make matters worse.

People have to work in order to be able to afford to buy homes. There are a lot more jobs at stake than just those who build the actual home and sell it. Every product that goes into a home from lumber and concrete to appliances creates manufacturing, transport, mining, and wood harvesting and milling jobs.

Home construction also generates service and retail jobs. The 300 plus new homes selling on an annual basis now in Manteca are being bought primarily by older households. They can afford to buy and spend. The fact that those homes are being sold – along with resale homes at a clip of 1,100 plus a year – is helping keep many of Manteca’s workers employed and is generating new economic possibilities.

It may not be the go-go days of six years ago, but there are definitely areas of the Manteca economy that are seeing growth. Imagine, however, if you took 600 households – the equivalent of new home sales in the past two years – out of the equation. Things would be a lot worse in Manteca.

Yes, many of those retail jobs are between $9 and $12 an hour. They’re not head-of-household jobs or are they?

In today’s reality, a $100,000 home with 3.5 percent down translates into a $710 a month payment which is enough for a couple that each has a 40-hour job at $9 an hour can afford on a gross income of $37,440 a year.

Many of the same people who bellyache about housing prices dropping also rant about homes not being affordable in Manteca or the wages not being there to support such a home purchase.

Open your eyes. Housing prices have finally aligned with the job market in Manteca for the first time in 20 plus years if not longer.

Can every household that has a combined income of $18 an hour buy a home? No, they can’t. Everyone comes to the table with different financial situations based on decisions they have made. Is it impossible for someone with such an income level to buy a home in Manteca? It isn’t anymore.

By all accounts, I should be one of the people who are clinging to the perception that somehow new housing construction is killing me on a personal financial basis. I bought on the way down at $189,500. The assessor says as of Jan. 1, 2009 my home was probably worth $102,000.

Realtors will tell you the market has dropped since then  making my two bedroom, one bathroom home probably worth somewhere in the $90,000 range.

Is that horrible? It is if I need to sell the home today. Am I hurting because of the drop in value? Well, I still have a job and the cost of a lot of things have gone up and other things have gone down including my taxes in a few months.

I didn’t buy a home to use as an ATM. I will admit in the back of my mind I am thinking about a reverse mortgage once I retire in order to stay in the house so I could have a reasonable level of living.

The market by then will have come back and probably slipped at least once or twice. I will still have value in my house from what I paid into it and probably some appreciation. So what if I don’t end up with a sizeable appreciation in the value of my home? I’ve got a roof over my head and a place I can call my own.

We have an opportunity today to correct our excesses and to bring things back into kilter for the type of slow, solid growth this nation experienced from after World War II to perhaps the mid 1970s.

There weren’t huge jumps in value during that time in houses. No one used their homes as ATM machines although second mortgages to make home improvements weren’t unusual.

It was all about a house being a home.

Most people didn’t go overboard in getting more home than they really needed or could afford.

And, perhaps most importantly, they didn’t demand other people lose their jobs so the government could artificially prop up the price of their home once they bought it.

To contact Dennis Wyatt, e-mail

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