by David Stanowski
08 August 2007
Galveston has a long history of problems with vacant houses and buildings, but since their number has declined, in recent years, there seems to be little concern that anything could reverse this trend! Unfortunately, most people in Galveston seem to be blissfully ignorant of the recent national real estate bubble, and if they are aware of it, they believe that it has not affected The Island. Analysis of price growth, and inventory levels contradict that belief, and confirm that Galveston fully participated in the bubble.
Number of Vacant Houses in the U.S.
The hope that the new housing units, built over the last couple of years, will be snapped up by eager buyers is belied by the fact that Galveston had a 20.8 month supply of inventory, in June; a higher level than in most areas of the country! With 6,300 more housing units due to be completed this year, this is no time to be breaking ground on more projects, without considering their impact on existing inventory!
If development is not limited, we could be creating ghost towns out of new subdivisions, and empty skeletons, instead of fully-occupied condos, as Phoenix and Miami are discovering the hard way! The recent building boom has already DOUBLED the number of vacant housing units in this country! In addition, more supply will only add to the downward price pressure, and prolong the recovery from the post-bubble fallout.
Percentage of Vacant Houses in the U.S.
Vacant housing units are already becoming a blight on other cites around the country. With poor maintenance, and overgrown landscaping, they are eyesores that directly impact the quality of life, and property values, nearby. Houses with untended swimming pools become breeding grounds for mosquitoes, and hazards for children. Of course, the most negative impact of vacant housing is realized when these units are gutted by scavengers and become shelters for vagrants, shooting galleries for drug addicts, centers of prostitution, and headquarters for drug dealers!
In the Cleveland area, some local governments have been forced to spend millions of dollars to install alarm systems, and to do maintenance and yard work, to minimize the negative impact of vacant houses on their community! Phoenix and Atlanta are experiencing similar problems.
Click here for full size graph
Nationwide Inventory of Existing Homes For Sale
has doubled during the recent Real Estate Bubble
There are 9 months of Inventory For Sale on a national basis,
versus 20.8 months in Galveston
Government interference and regulation, in the markets, ALWAYS causes problems, and this is certainly true of its planning and zoning functions. However, it has long been the Conventional Wisdom that property owners must gain approval, for their projects, since the impact of the use of their land and buildings, on the surrounding community, is more important than their rights, to use their real estate, in ANY MANNER that they choose. For this reason, it is no longer necessary to maintain any pretense that the truly free use of real estate still exists, so it is time to take a more comprehensive approach to the planning and zoning functions.
U.S. Existing Home Sales
Currently, the Galveston Planning Commission seems to be focused primarily on the impact of population density, building height, traffic congestion, and environmental issues, when it comes to reviewing proposed development. It is now time for the City Council to direct the Planning Commission to refocus its attention from its usual decision-making criteria, to include and consider the supply of proposed new housing units, versus the projected demand for them! If new construction adds to our stock of vacant houses and condos, these units will create a more negative impact, on our community, than any of the other issues that the Planning Commission normally considers.
U.S. New Home Sales
However, projections of the need for new housing units MUST be done in a reasonable and unbiased manner, by the Planning Commission, rather than relying on feasibility studies commissioned by developers. As long as developers can borrow money, they will demonstrate a need to keep building!
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