Has the economy undergone a permanent and unwelcome change?

Has the economy undergone a permanent and unwelcome change?

For decades, the conventional thinking was that housing led the country into recessions and then out of them. But housing has been hurting for a good five years now, since well before the Wall Street meltdown of 2008 and 2009.

Just consider a couple of key measures in the Kansas City area. Five years ago, in the first quarter of 2006, cities and counties in the metro area issued 3,007 permits to build single-family homes, more than 500 more than were issued in all of 2010 – and 2010 was better than 2009. Roughly one-fifth as many permits were issued last year as in 2005. (Permits also were off 32 percent in Eastern Jackson County in the first quarter of 2011.)

Meanwhile, prices keep falling. The average home price – new and existing – in the area was $145,332 last month, a 5.7 percent drop in a year. Nationally, experts say, prices might well keep falling, as significant numbers of foreclosures continue and banks find themselves in the uncomfortable position of owning – and having to get rid of – lots of homes.

Although the Kansas City area has been nowhere near as hard hit by the housing collapse as places such as Florida and Nevada, the numbers nationally and regionally suggest a turnaround is not yet at hand. Some, surely, is a reflection of continued jitters over the economy. Who buys a house when unsure about the next paycheck?

Still, it takes a lot of materials and good deal of skilled and well-paid labor to build a house. That’s a major economic impact, but right now it’s a weak spot – one more thing keeping the economy in low gear.