The Star Tribune has a pretty good article on the disappointment of folks who now have to pay through the nose to heat their gigantic suburban houses:
Eight years ago, Holly and Mark Batton built their 4,600-square-foot house in the rolling countryside of Credit River Township south of the Twin Cities.
They saw their home, with its swimming pool and five bathrooms, as an investment they could enjoy as its value rose in fast-growing Scott County.
The Battons belong to a generation of Americans who are living life larger than ever. Now, with energy prices driving up the cost of everyday life, they are also among a generation that is suddenly wondering if they’ve gone too far in pursuit of the good life…
The Battons’ house, with a tax-assessed value of nearly $600,000, is merely of average size in Scottview Estates.
In the Twin Cities and the surrounding suburbs, the home prices have been rising steeply for a number of years. This is not just a pathological need to keep up with the Joneses, nor just conspicuous consumption, nor just the American taste for debt and distaste for savings. Like it or not, there has been a strong economic incentive to build or buy the biggest home you possibly can, because everything is going up, fast. So it isn’t as simple as "silly you, you bought more house than you need, you wasted your money." People see these houses as something to invest in, for fast equity-building and profit.
Let me tell you a story of three married couples I know. In 2000 Mrs. A. was in graduate school and Mr. A. had just taken an engineering job. Mr. and Mrs. O were both in graduate school, eking along on their two stipends. Mr. T. was a grad student and Mrs. T. a stay-at-home mom, eking along on one (generous as stipends go) stipend.
The A’s said to each other, "Let’s not buy a house yet. We haven’t time for the upkeep, we don’t want to have too much space or we’ll start acquiring a bunch of junk, married student housing is subsidized and so it’s a terrific deal, and we can both take the bus every day. Besides," said Mr. A., "when my parents were first married they had to live in the attic above Grandma and Grandpa’s house. We should be happy with what we have."
The O’s decided to buy a cozy little house in "Nordeast" Minneapolis the minute they decided to get married. The T’s, while they were still living many states away, bought a tiny condominium in St. Paul without having had the chance to really explore their options. "Too bad for them," thought Mr. and Mrs. A. "Married student housing is such a great deal."
Several years later, when the A’s finally got around to shopping for a house and were fainting at the prices of semi-run-down inner-city duplexes, the T’s and the O’s sold their respective dwellings at large profit. In particular, the T’s condominium sold for nearly twice what they had paid for it.
Do Mr. and Mrs. A wish they’d bought more house than they needed? You bet your sweet bottom we do. We might have sent a kid to college on the profits!
ANYWAY. That’s just a bit of local color. The thing that people forgot is that big houses aren’t just a capital outlay; they have operating cost. And that scales with energy costs. And conspicuous consumption is part of the problem. But some of this is just because it actually appeared to make economic sense.
Houses are still ridiculously overpriced. Take a look at what $700,000 to $800,000 buys you in this town. In particular, look at 2011 Fremont Avenue South. It’s well-equipped, but… is it that well-equipped? Do I live in San Francisco or something?
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