Housing bubble theorists will offer you a list of reasons why it might have been appropriate to have a bit of a housing boom, and then (perhaps correctly) show you that the factors on their list are not big enough to explain all of the housing boom we actually experienced. The final step in their argument is to attribute all of the unexplained part of the housing boom to irrational exuberance.
Of course, the entire argument falls apart if their list is incomplete. For example, do those lists include this?
American's incredible accumulation of stuff is real (itself caused by China's seizing its comparative advantage in making that stuff), and the accumulation undoubtedly increased American's demand for space at home. The rise self-storage industry is a reflection of that increased demand for space.
Note that I do not claim that the entire housing boom is due to American's demand for closet space. In fact, that's the point: there are any number of things that we may someday understand to explain the residual, and I see no reason why those possibilities are limited to "irrational exuburance."
Of course, the entire argument falls apart if their list is incomplete. For example, do those lists include this?
American's incredible accumulation of stuff is real (itself caused by China's seizing its comparative advantage in making that stuff), and the accumulation undoubtedly increased American's demand for space at home. The rise self-storage industry is a reflection of that increased demand for space.
Note that I do not claim that the entire housing boom is due to American's demand for closet space. In fact, that's the point: there are any number of things that we may someday understand to explain the residual, and I see no reason why those possibilities are limited to "irrational exuburance."
3 comments:
Mr Mulligan,
This might be a silly question, but wouldn't it be useful to try to regress the rise in self-storage employment to and mortgage defaults/foreclosures and unemployment? My hypothesis for this trend is that some individuals get a self-storage unit when they are downsizing their living quarters, e.g., moving from their own apartment to that of a relative. I had a SS unit myself due to a spatial downsizing, and the other renters in my SS complex seemed to be in a similar situation.
Hi! I also noticed that small and medium sized enterprises would really need self storage facilities because of the costs involved. Maybe that is also one reason why they are able to make ends meet.
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