Wednesday, May 25, 2011
Which came first, the chicken or the house?
Image by river seal via Flickr
I've been seeing these annoying commercials about, of all things, the housing market. The apparent point is that the housing market creates jobs. OK, so I should now go buy a recently built home? This is almost a classic which came first, the chicken or the egg question. But, not really.
First of all, I don't think that building new homes creates jobs. On the other hand, I do believe that jobs provide the funds for people to purchase homes, even newly built homes. So, unless the housing market is being subsidized, which would be a really stupid idea, there needs to be a need for new homes and capital to purchase the homes in order for them to be built. There may be a need, but, without jobs to provide funds for people to make the payments on the mortgages it is just another financial disaster waiting to happen. Speculators may build homes in the hopes (speculation) that people will buy them. True, a few carpenters will work to build them, but those are temporary jobs, not sustainable stay in one place jobs.
Now, why are these "commercials" being broadcast on a daily basis? Is it because I need to be convinced that housing creates jobs? It sounds a bit like propaganda to me. That makes me very leery of the people who are putting these adds out. Now, if the beef council puts out an add about "Beef, it's whats for dinner." I know it is because people in the beef industry want me to buy more beef. But I am not going to buy a house unless I need one (I do) and the price of homes in my area are right (they are not, they are still over valued). So, why do we have these "adds"? I hope we don't see another "stimulus" package on the horizon.