No Depression

Weather the economic crisis in a house that's outlasted a few of its own

2321 Peachtree St.

2,905 sq. ft.
4 bdrm, 2 bath
Jessica Rodocker
Horizon Realty

Whether you call it a contraction, correction, or a harbinger of the coming recession, the collapse of the real estate bubble and the resulting upswing in foreclosures have left a huge amount of housing stock in the hands of lenders. A quick Internet search, for instance, reveals more than 700 foreclosure listings currently on the market in Knoxville. Not that Knoxville—largely bypassed by the bubble—has been particularly hard-hit. The similar-sized city of Fort Lauderdale, in once-booming Florida, boasts more than four times the foreclosures cluttering the real estate listings.

Underpinning the entire crisis, ironically, is the very mechanism that's supposed to make mortgages work. You don't pay the note, and the bank repossesses the place. The value of the fixed asset—the house—is the collateral that supposedly protects the bank in the event you go belly up. But, as the Fort Lauderdale example illustrates, when speculation drives the value of the house and its attendant loan out of all relation with reality, the whole thing collapses like a house of cards the moment people stop buying.

What may actually bode worse in the long run, however, is that "house of cards" applies to more than the Ponzi-scheme underpinnings of the mortgage collapse. Constructed of little more than vinyl, chipboard and glue, today's tract houses, when you get right down to it, aren't all that "fixed" of an asset. Add in spiking fuel prices and the fact that many of them are on cul-de-sacs miles from anywhere and within walking distance of nowhere, and it's little wonder that houses in many suburban markets are rapidly shedding value.

Then there are houses like this circa 1916 bungalow in South Knoxville. How many tract houses out in Halls will still be hanging in there 92 years hence? And you'd be hard-pressed to find something new with this much detail and craftsmanship: hardwood floors throughout, French doors everywhere, two Arts and Crafts style fireplaces (one river-rock, the other flanked by built-in bookcases), coffered ceilings in both the living and dining rooms, plus a stunning built-in china cabinet in the latter. And the same attention to quality applies to the restoration and renovations, including a kitchen loaded with granite and stainless steel and custom cabinetry with old-fashioned bin pulls.

So go ahead, buy this immaculate bungalow with its broad front porch plus a screened one out back and don't worry whether it'll hold its value if we slide into a depression. After all, it's weathered one already.