Is Bloomington Planning Ahead for the Coming Housing Glut?

By Vincent Herring

I am interested in getting a better idea of what is necessary for a healthy and sustainable civic design for Bloomington. From my research, as much as 30-40% of the homes in the US will be coming on the market over the next 20 years. Roughly half a century’s worth of home building seasons will all be coming onto the market in a condensed time frame, with a decreasing population to buy. 

The pace may be even more exaggerated as the low interest rates have eroded the savings of many of the “Baby Boomer” generation homeowners.  This in combination with pension funds and 401/IRA underperforming, may be leading to an increased rate of retirees needing to cash out on equity in their homes. 

These circumstances have the makings of financial calamity for some areas of the country, but not all.  I am not sure this is something that is being looked at by our Council or Mayor.  I have not heard any mention of this in any conversations had so far in the UDO and city planning meetings.  How do we know we won’t be one of the markets that are ill affected?

We are seeing a sharp decrease in materials prices, decrease in bid offers, increased time on market, and increasing inventory nationally.  The latest housing squeeze is semi-manufactured by:

  • A massive Black Swan financial event (COVID-related disruption of world economies),
  • About 1 million would-be sellers staying out of the market,
  • The overlap of generations in the house buying age range. 

The trends we see in the macro world view seem to be pointing away from housing shortages, but instead oversupply in the long term. What happens when large numbers of housing units come onto a market that cannot absorb them? How will large investment funds such as REITs or Blackrock be affected, as they made massive purchases, or funded large building projects while at peak prices? 

How do concerned citizens in Bloomington get good information, and look at sound long term civic planning? How do we get that information out to the public at large, and force useful conversations? 

Civic planning is something that has a long game with 5-, 10- and 50-year windows to consider. With current information, the 20-year forecast could have dire consequences for long term citizens of the greater Bloomington area.  This is not something that anyone wants, whether you belong to the proverbial “THEM” or “US.”

The author is a Bloomington-based scientist with a background in physical and analytic chemistry.

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