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Bell Tolls on Housing Boom?
Are McMansion owners the last group deserving of sympathy in a slowing economy? What about the people who build them? Toll Brothers are the company most responsible for the rise of "the estate home". The eponymous Mr Toll - a man whose very name invites headlines of doom, see above - claims in this morning's WSJ that the housing market slowdown is as bad as he has seen:
In his 40 years as a home builder, Mr. Toll says, he has never seen a slump unfold like the current one. "I've never seen a downturn in housing without a downturn in employment or... some macroeconomic nasty condition that took housing down along with other elements of the economy," he says. "This time, you've got low unemployment, you've got job creation, you've got a stable stock market and relatively low interest rates."
This on top of a lengthy report in last week's FT describing the housing market as "feeble". Given that investment in home equity is to the current expansion what investment in stock was to the last, a slowdown will carry consequences. I don't pretend to fully understand the economics of the American housing market. But declining house prices carry devastating political consequences, as voters struggle with mortgage payments or find themselves trapped in negative equity. And i guess McMansion owners might be joining McMansion builders among the hardest hit.