How the Mortgage Crisis Stifles Innovation and Green Design


John Hagar's house is made from 17,000 tires. Image: Anton Troianovski/WSJ

At the start of the mortgage crisis I made some predictions, including the slamming of the door on innovation and green design; appraisers don't understand it, so "Innovation and green design requires cold, hard cash from rich purchasers. It's history for everyone else." A commenter called the post "by far, the most ignorant piece of unsubstantiated, inaccurate garbage that I have ever read. " But in at least one of my predictions has been proven correct.

According to the Wall Street Journal, "unusual" homes have become just about impossible to finance (or refinance, which is even worse)
Richard Messer's house is made from 50 tons of Coors Beer packaging

If your house is made of 17,000 old tires like the Hagar family's, it is going to be pretty tough to find comparables. According to the WSJ:

So far as anyone can tell, no home made from tire bales has sold recently in the state of Colorado. Lenders have been telling the Hagars they can't value the property and won't give them a regular mortgage.

There is nothing new in this; Daniel Akst wrote back in 1992 when he was trying to build a modern house:

" Almost everyone borrows to buy or build a home, and the size of the mortgage you can pry out of a lender depends heavily on the appraised value of the place, which is the bank's collateral, after all. I am here to attest that unusual houses, no matter how wonderful, appraise for less."

It is also appropriate that there are tough standards for lending. But it is still going to stifle innovation, experimentation and creativity.

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