Financial crisis hits close to home

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Josh Gehrke said the time is right to buy a home.

Gehrke, a veterinary medicine graduate student, owns a home on Ann Street with his brothers Jason, 25, and Pete, 24.

The brothers purchased their home while undergraduate students, and Josh Gehrke said buying a house would be a good decision considering prices are low.

“It is a good investment. If you look in the long run we get to do basically anything,” he said. “You don’t have to worry about landlords, about moving stuff in or out, don’t have to worry about those hassles. Over the years you just get to sit back and relax.”

But the financial crisis has brought suburban home construction to a near halt, a local developer said.

Many students believe the financial crisis is a product of the market’s cyclical nature and that their degrees will allow them to afford a suburban home.

Nick Huff, a no-preference freshman, said he can’t imagine there being a housing crisis when he graduates in four years.

“I think the financial market right now is just on a down curve now. It’s bound to go back up,” Huff said. “You have the European markets and American markets cutting interest rates by 0.5 percent, that should stimulate the economy enough for us to slowly start getting out of this valley that we’re in in terms of financial lending.”

The problem might not be affordability, though. It soon could be availability.

Gilbert White, owner of Gilbert M. White Realtor Inc., a Haslett-based development company, said new home permits for the Lansing area are down 90 to 95 percent compared to 2005 levels.

White said much of the reason suburban housing construction has stopped is because people are tired of long commutes and high gas prices.

He said there is a noticeable shift among cities to high density communities, and cities are passing ordinances to promote such developments. East Lansing, Lansing and Meridian Township have emphasized high density development in recent years, he said.

“You need to think of a home as being a loft, a condominium, a townhouse or an apartment as well as the suburban home,” White said.

“We’ve known for years that alternative housing was strongly desired by the market, by the consumer. It just wasn’t highly available.”

What won’t be highly available are loans, said Connie Costner, a specialist on consumer economics and family credit issues and an MSU Extension program leader for Children, Youth, Families and Communities.

Despite less relaxed lending requirements, though, Costner said housing will become affordable again in time for current students to own a home.

“I’m an optimist. I believe the economy will bounce back,” she said. “Because owning a home is a fundamental belief in our society, people who can will own a home.”

Costner said a positive side can even be extracted from the financial crisis.

Considering the crisis was spurred by people buying homes they couldn’t afford, which has been highlighted throughout the ordeal, she said students will now be more aware of personal finances and will make smarter decisions with their pocketbooks.

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