EYE ON THE PIE: The trouble with inexpensive housing

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From 2000 to 2004, the U.S. Census Bureau tells us, there were 148,500 housing units added in Indiana. That’s a 5.8-percent rate of growth (16th in the country), exceeding the national rate of 5.3 percent.

During the same period, Indiana added

134,600 people, a 2.2-percent increase (33rd in the country) and just more than half the 4.1-percent national rate. For every person we added, we built 1.1 housing units, the 10th-highest rate in the nation.

What’s going on? To get some insight, I turned to Earle Crème-Brulée, an underappreciated Hoosier housing authority.

“Nothing,” Earle told me on his cell phone while driving between his offices in Kouts and Cementville. “Just what we have been seeing for years.”

“And what is that?” I could imagine him in his 1986 Pontiac.

“More security in society means more elderly folks living alone,” he replied. “Postponement of marriage by youngsters means more of them living alone. More divorces equal more households. More wealth gives us more second homes.”

“But it doesn’t make any sense,” I pleaded. “Look at Wayne County. It lost nearly 1,400 people in those four years and gained almost 400 dwellings. Then there’s Vigo County, where the population dropped 2,700, while dwelling units climbed more than 1,000. Or take Madison County, where the population fell 2,800 and 1,400 new units were built.”

“Precisely,” Earle said over his phone, “Folks in Richmond, Terre Haute and Anderson have more elbow room these days and are, on average, living in more modern homes. That’s progress brought to you by a housing industry that responds to the market rather than to some bureaucratic formula about population and housing growth being in sync.”

“Listen,” I urged, “there are bizarre examples that deserve a less flippant response. The Census Bureau’s figures show that Clinton County added 60 people and more than 300 housing units. Huntington County had virtually no population change and added 560 units. There’s got to be some reasoned explanation for these data.”

I heard nothing over the phone. After a few minutes, I redialed Earle’s number.

“Sorry, there,” he said. “Must have hit a dead zone.”

“Some places,” I said, “had well-balanced growth. Hamilton County had commensurate population- and housinggrowth rates. “Hamilton expanded its housing 24.1 percent and its population 24 percent. But it’s an exception.

“If you examine the data, Earle, you find that 90 of Indiana’s 92 counties had faster growth in housing units than in population. DeKalb and Owen were the exceptions. And thus, based on what you already told me, that’s why family values are disappearing in this state.”

“Nut case,” Earle whispered under his breath. “Where’s the connection?” he said aloud.

“Come on, Earle,” I said, staying calm. “You told me about elderly Hoosiers and young adults not living with their families. You talked about the postponement and dissolution of marriage. And more second homes-that’s a death blow to functioning communities as people work to get away from where they are known to someplace else where they are strangers.

“You see, Earle,” I said quietly, “housing has become too easy to buy, too inexpensive relative to the income of families, and that is leading to more housing units with fewer persons per household. It’s happening because relatively low prices paid by developers for land, environmental protection and construction workers leads to homes being sold at prices below their real social costs.

“This then contributes to the family distortions you mentioned. Plentiful housing helps destroy the traditional values of our country. If housing were more expensive, the evils afflicting families and communities today could be defeated and we could be proud, once again, to be Americans.”

Earle did not respond. I suppose he hit another dead zone.



Marcus taught economics more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mortonjmarcus@yahoo.com.

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