| In a recent interview with CNBC, Warren Buffett made | | | | remodel whichever is less), but we need to get |
| a chilling statement for most of the people associated | | | | residential construction back on it's feet and stimulate |
| with the home building industry. Mr. Buffet said, "If you | | | | cash flow in the entire building product pipeline. I can't |
| want to end the recession as soon as possible, you do | | | | think of a better to do this than to tear the old homes |
| nothing to encourage new housing construction." I | | | | down and put up new ones. Think about the products |
| understand Mr. Buffett's solution to balance supply and | | | | and labor used during home construction. Most of the |
| demand for new households before adding more | | | | products are domestically manufactured and |
| homes to an already struggling market. But, being a | | | | domestically supplied. The homes are built (for the |
| recent victim of the "no new construction" economy, I | | | | most part) with domestic labor which supports the |
| can think of better ways of stimulating the economy | | | | local economy. The auto industry - the industry with |
| without a "no new construction mandate." | | | | the stimulus bill - is comprised of global parts suppliers |
| The solution can be found in that every suffering | | | | and labor scattered all over the world. Stimulating |
| domestic car industry. It seems there are a lot of cars | | | | domestic housing construction will do more for the |
| on the road that are old and rusty and use too much | | | | domestic economy than the stimulus passed for the |
| gas. It is also apparent that people are not buying new | | | | big three auto makers. |
| cars the way they used to. So the government | | | | It may seem to be a crazy idea but local governments |
| passed a "cash-for-clunkers" bill that gives car buyers | | | | have been doing this for years. They call it "urban |
| a voucher of up to $4500 for their old cars when they | | | | renewal." Public works projects always target |
| trade them in for new ones. Basically, we'll buy your old | | | | "decaying areas" of a city by building football stadiums, |
| car and you go buy a new one. | | | | shopping malls or tax free industrial zones. Maybe |
| Why can't we do that for residential home owners? | | | | what we need now is "suburban renewal" where we |
| Most people who want to buy a new home need to | | | | take the old suburban homes of the 50's, 60's and 70's |
| sell their old home first. And if they can't do that, why | | | | and make them into shiny energy efficient dwellings of |
| not build a new home on the property they already | | | | the future. No need for new roads, new infrastructure, |
| own? Most homes built before 1990 are not very | | | | schools, firehouses, etc. They are already built - and |
| energy efficient even with modern upgrades. To save | | | | built close to where everyone currently lives. Simply |
| future energy consumption and stimulate a vital | | | | tear down the old houses and build new ones (just like |
| industry like home construction, why can't home | | | | the old ones, but better) in its place. If the auto industry |
| owners get some incentive to tear their house down | | | | has its "cash-for-clunkers" bill, the housing industry can |
| and rebuild with a new energy efficient home? I know | | | | have a "dollars-for-dwellings" bill. It will provide an instant |
| there is the tax incentive for energy efficient | | | | economic stimulus, improve home prices and save |
| remodeling of about $1500 (or 30% of the cost of the | | | | costs on future energy generation. |