I have been waiting to find someone who would mention this fact because it has long been one of my contentions that part of our failure to understand our own culture is that we deny the facts in favor of the fantasy. England’s George Monbiot writing in the Guardian on Oct. 9th, however, finally crossed the line in this post about welcoming the coming recession.
The exception is housing, and in this case the growth in value is one of the reasons for exclusion. A new analysis by Goldman Sachs shows that current house prices are not just the result of a shortage of supply: if they were, then the rise in prices should have been matched by the rise in rents. Even taking scarcity into account, the analysts believe that houses are overvalued by some 20%.
Here in California 20% seems really low. Six and Seven bedroom McMansions jammed up against each other so that the developer can maximize his or her income. Six or Seven bedrooms when the average family size has shrunk to 2.5 children.
George’s point is that we will never cut back unless forced to do so and now that the recession is at the gates, there is more and more reason really to throw them open and let it in.