We’re not ashamed to declare ourselves total stats geeks, which means we’re always curious about the stories behind Big Important Numbers. And occasionally in our mathematical wanderings, we come to realize that some of those Numbers are a heckuva lot less revealing than they’re cracked up to be—batting average, for example, or Gross Domestic Product.
After a delightful stretch of investigation, we’d now like to add housing starts to that ignoble list. We’ve always suspected the all-important yardstick had some holes, but we never realized just how “dumb” it was. The figure’s chief shortcoming is its total failure to account for the quality of starts, aside from measuring the number of units involved. Yet when the sheer number of starts falls short of expectations, as happened this morning, the widespread assumption is that the economy continues along its death spiral and investors (or, rather, CNBC talking heads) freak the hell out. More houses, good; fewer houses, bad. (And, yes, the Animal Farm echo was intentional.)
But construction jobs alone do not a recovery make. Let’s take a moment to ponder the downsides of obsessing over raw housing-start numbers:
*We’ve already got too many houses, with a record 19 million abodes now vacant. The decay of those homes has obviously negative consequences for tax revenues, community stability, etc. (If you haven’t read George Packer’s excellent piece on vacant exurban homes in Florida, please hop to.)
*The construction of homes in increasingly far-flung communities strains resources, especially public services such as water supply. This drives up costs across the board, adversely affecting consumer spending.
*When the majority of new homes are constructed at increasingly great distances from metropolitan centers, more starts means higher energy prices (not to mention the complication of any conceivable mass-transit plans).
*Renovations can have more positive impact on big retailers such as Lowe’s, since redo supplies are often purchased off the shelf rather than via wholesale by the likes of Toll Brothers. Yet HUD does not track renovations with the same zeal as new construction, for reasons that mystify Microkhan.
*We’re building homes way too big. And there are consequences, starting with wasted consumer dollars. That extra $30,000 you spent on the fourth bedroom that now contains nothing but broken Atari cartridges and t-ball trophies? It really could’ve been put to better use.
None of this is to imply that housing starts don’t have some value as a standalone figure. But would it really be that hard for HUD to zoom in on its numbers and provide context? Google Maps is easy to use, guys. And we assume you’re familiar with the splendor of zip codes. Refine your numbers a bit, and you’ll provide us with a much better idea of whether we should start building a raft for Cuba.
(Monopoly House sneaker image via KicksOnFire.com)