another piece of the American Pie.
With 3rd floor doors thrown open and the moving trucks in full process, the cynical side of me wanted to open this post with an audio of Queen's, 'Another one bites the dust.' Can't do it. There are too many real people who are going to suffer from Davis Homes' Indiana closing. I simply can't dance on their 'free with select home model purchase' neatly excavated grave. I watched several of the casualties carrying out their belongings in white file boxes Wednesday afternoon from my next door office at 3801 East 82nd Street on Indy's north side. 51 years of building homes in our city and that's it. The usual array of media trucks circled with NBC, CBS, ABC and FOX affiliates all getting their plausibly live shots from the front corner of the building.
In an odd way it's a necessity. This mess we perceive to be the American Dream is still spiraling down like a child's broken glider on a grey Midwestern afternoon. It won't start to get better until the herd has been thinned, the 'in lurch' consumers moved on and the weaker entities like Davis vanquished along the side of the free market road. There will be others. Just look at the numbers across the country.
While we seem to be getting a reprieve from the gas price monster, only now is the real carnage from the mess of our economy becoming clear. While oil prices have certainly been inflationary, which is also another shoe yet to drop, the perfect storm of a housing nightmare is only in it's early stage. In Indiana we've built over 100,000 NEW homes since 1998. That's one NEW home for every preexisting household in the 11 county metro. Can you say oversupply, class? I have countless clients who have bought in the starter home category over the last decade only to see the avalanche of new product quickly drown out their hopeful and short lived appreciation. In some ways it's hard to feel for the behemoths that are track development builders. Countless times I saw builder's own lenders take a shortfall from one home and build it in to the mortgage of a new home they were selling a particular prospect. Congratulations Mr. and Mrs. Customer. You've just become the proud owner of a $13,000 equity deficit on the day you closed on your new home.
Through all of the muck, there is a ray of light, albeit a faint one rising in the east. It's the ray that is telling of a new old day in home ownership. A day when buyers actually have to posses a down payment, a job and a savings account to buy the American Dream. It won't be easy teaching a lost generation of twenty and thirty somethings of the new old way of ownership. Hopefully when that school gets out, we won't be staring at another steaming pile of destroyed equity like we are today.