A starting point for some, a dead end for others

Preparing to write this post, I looked-up the definition of “cul de sac” at Dictionary.com. One of the entries is, “A street or lane closed at one end.” But another definition is, “any situation in which further progress is impossible.”

A seemingly endless stream of stories has been written about both the volatile real estate market and the sub-prime mortgage meltdown. There is one story—a series, really—that I’d like to share with you, for the way it puts a face on the families who have both lost and gained during the past few years of change. First, I’ll offer the main story, which published in the New York Times on August 22, 2009. It focuses on a neighborhood called Beth Court in California, and sheds some light on the families who are “trading spaces.” The same day, a companion story focused on the types of things some families were selling via garage sales, in an effort to stave-off the credit collectors until another day; the piece also shed light on families who were taking advantage of the deals.

Implications: My heart goes out to anyone who has faced the economic trauma of losing a home, a job, or any other keystone of life which can upset a family and a lifestyle. That having been said, part of my job is to explore “what’s going on” out there, and help people like you anticipate future events that could follow. (It has never been my goal to predict the future, only to suggest a range of possibilities… and inspire you to do the same!)

According to an analysis published by USA Today, the housing market will continue to have more supply than demand in the U.S. for quite some time, depending on the part of the country you’re in. So, it’s safe to assume that people will continue to migrate; some from owned homes into rented properties, and some from apartments into houses.

An important point begs to be made with regard to either group: Whether someone is trading up, or if they are trading down... THEY ARE STILL TRADING. When a family moves from a large home into an apartment, their lives and belongings often must become more compact; and with relocation, they are not close to the same bank, dry cleaner, grocer, drug store and other vendors they had become accustomed to. They are “up for grabs,” as many of their consumption habits have changed.

The same is true for a family that takes advantage of the current market, moving from a rental property into an owned home that has finally come within financial reach. They are establishing new roots, too, and must also acquire many of the tool kit and workbench items that come with a home they must now repair and improve (often not the case when they were renters).

Both markets still have needs, and both categories of people will still consume. Profit waits for the company who understands and serves those needs.

Mike Anderson