Ossification + Speculation

I’ve been digging into the history of American housing and subdivisions, trying to flush out my research proposal. Very strange and interesting and at times scary history. In particular, I am looking for drivers of the ossification of the material system of the balloon frame and the spatial system of the subdivision. Not surprisingly, there are a plethora great articles taking these issues on over the past couple years, including Beyond Foreclosure by Aron Chang and Ossified Dwelling by Renee Chau in the fantastic Places Journal.

Also, some interesting observations from from Robert Schiller’s book Irrational Exuberance that I am trying to get my head around, including this graph:

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Quite interesting to look at home prices in this graph, and the distinct phases the market has gone through, from unregulated market before 1929, to the collapse of the market in the depression itself, to the long period of (enforced) stability from 1945-1974, to the boom-bust cycles since the deregulation of the 1980’s. It becomes apparent that 2008 crash was just the biggest of 3 cycles so far, and the data seems to suggest we are on our way to a fourth. Further deregulation by Trump and the Republican Congress will no doubt feed the fire.

Schiller argues that housing price are decoupled from building cost, and that on average housing price remains at its 1890 level, corrected for inflation. I’m no economist, but it does seem like, since the 1980’s, housing speculation is driving prices up, and this bears out in the experience of young people trying to buy houses these days (especially in places like SF and PDX). I have been wondering (as suggested by Renee Chau in the above article) if the important relation is not price to construction cost, but rather the ratio of land cost to construction cost. As land cost continue to increase relative to construction costs, this drives developers to build larger houses on smaller lots, pushing the median cost of the house higher and higher. This was of course exacerbated by the housing crisis, as people took on more and more debit to buy bigger and bigger houses, as they considered not only their family’s needs but also the “curb appeal” of the house and its potential to be resold at a profit.

Just cracking the surface, but it seems like there is an interesting architecture/urban planning project in here, targeting both the “ossification” of existing subdivisions and the uncontrolled growth of new developments, driven by unhinged speculation and profiteering.