‘The Next Real Estate Boom’

[Mike G]

http://www.washingtonmonthly.com/features/2010/1011.doherty-leinberger.html

Interesting article for our next cycle of growth.

[Thomas J. Johnson]

Interesting read. I only had time to scan the whole thing and read about 2/3 of it, but I got the gist.

While I agree with the author that there is more of a demand for homes in walkable neighborhoods with easy access to urban centers, the proposed means of developing these areas concerns me. Currently, the government owns the two largest mortgage lenders, now the author is proposing matching several private dollars to a single federal dollar. Essentially what this means is that you are going to have major corporations, developing areas with federally matched funds, using federally granted mortgages. What you have is another federally created financial/legislation structure that concentrates wealth and power. If the feds determine who gets the loans and then invests in those projects itself, how to do you think that will look? Haliburton, Freddie Mac, Fanny May and Goldman Sachs immediately come to mind… Furthermore, what will really happen is that these areas will become rental communities. You can already see this model all over southern California. You will end up with communities owned and controlled entirely by corporate and government agencies. Individual ownership becomes a thing of the past, along with person liberty and we end up living to work for and rent from the corporations that house us. This is a very real scenario… Another added bonus of having all of your “human resource wealth” in a concentrated area is that it’s easier to monitor. In a dense urban environment, with the right technology, you can keep tabs on your workforce 24/7/365

The author talks about demographics and we’re already beginning to see the transition taking place. Affluent people are moving to urban centers and displacing the poor (who can least afford increased transportation costs) to the suburbs. What you are going to end up with is a nucleus of wealth surrounded by abject poverty. That should be interesting… Now bring in the police and military to “protect” us and put our urban centers into a police state… Again, this is a very real scenario… Scary stuff, if you can see where they are going with this… And that is, where they are going with this…

[Boilerplater]

Hey, I hope they’re right. I’ve been advocating for smart growth and urban infill for years, and have even been accused of operating with a “personal agenda” that did not benefit the client. I’m currently reading “Retrofitting Suburbia”, which includes several case studies of just this sort of thing.

One thing they do not address is the phenomenon of nimbyism. Infill projects take a lot longer to approve and require a lot more design and public approval time. I worked on one urban infill townhome project where the developers got so frustrated at the demands of the city that they decided they would never do a project like that again. The city was asking for commercial-grade construction standards when was was being created was essentially production housing. Developers go to the exurbs because its easier. You don’t get neighbors showing up at your public meetings in sufficient numbers to derail a project because they don’t exist.

Then of course you have the funding issues as TJ has gotten into. Kunstler would argue that the country is now too poor to do rebuilding on this scale and our opportunity was missed. Yeah, maybe we’ll be living in corporate dormitories like the factory workers in China.

[Thomas J. Johnson]

Another one of the issues with infill projects that a lot of developers haven’t figured out yet is what I’ll call “Optimum Density Opportunity” (since we’ve been making up names on the Landscape Urbanism forum). What we’re seeing a lot of right now are “Mixed-use” projects sitting vacant. They are infill projects executed at the wrong time in the wrong area. While “mixed-use” works in dense urban areas because it provides immediate access to amenities in the community, it doesn’t work in suburbs. People don’t want to pay $400,000 for a flat above retail when for the same amount of money you can have a larger home, with land and a garage three blocks away from the flat.

There is a very real risk of infill projects not working because it’s not the right place and time. You can’t force it. It has to grow and evolve naturally based on real market demands. That being said, with the federal / private investment scenario proposed in the article, you’d be dealing with entire blocks or even towns. On that scale you might be able to force density by dictating the form of an entire town… You’re no longer talking about individual rehab projects.

[mark foster]

I am witnessing this phenomena first hand. My wife and I moved into her childhood home to take care of her mother and renovate the rather large, crumbling circa 1790 log/stone cabin in a “sub-rural” outskirt of our city. For the past 12 years, the suburban Macmansion cul-de-sac “forces of Mordor” have been relentlessly marching across the area.

Two years ago the building stopped in these burbs as if time stood still. The streetlights occasionally go off (for lack of payment), and partially built Tyvec-covered ghost houses set like some kind of western boom town gone bust.

The only new housing being constructed in our area is in a fairly dense new urbanism development–it looks like there is no recession there. And, the buyers are two groups– Gen whatevers with young kids, and empty-nest Baby Boomers. Our downtown is seeing a similar boom.

[Trace One]

http://www.nytimes.com/2010/10/29/world/asia/29mumbai.html?scp=1&sq=mumbai%20homes&st=cse

check this out for the future of development – urban infill, central core of super rich, surrounded by abject poverty, with the poor all voting to let the single rich guy keep all his money in the hope they will be him some day..

sorry to be such a NYT addict..It does get boring..

[Thomas J. Johnson]

That’s awesome!

“…soaring 27 floors into the sky. The parking garage fills six levels. Three helipads are on the roof. There are terraces upon terraces, airborne swimming pools and hanging gardens in a Blade Runner-meets-Babylon edifice overlooking India’s most dynamic city….There are nine elevators, a spa, a 50-seat theater and a grand ballroom. Hundreds of servants and staff are expected to work inside.”

What better way to keep watch over your minions than from a tower overlooking the city!?

No, in a seriousness, you would think that with $27 Billion in the bank he’d be able to afford an architect to design it. That is one of the ugliest buildings I’ve ever seen! I hope, for his sake, the picture in the NYT is not the finished product. I’m confident that I could do better than that!

[Steve Mercer]

Well this has been the European model for centuries. I am sure any European reading this article would have a chuckle. I disagree with one point in the article. It is not a matter of Transportation Policy, It is more of a matter of Energy Policy. If our government set a national goal to bring the worlds first fusion reactor onliine with-in 20 years much like we made the goal of putting a man on the moon. I think very little would change, me might all be driving electric cars but that wouldn”t necessarily be a bad thing especially if they have 20 years of technological improvements before they become mainstream. The reality is we will probably be somewhere in-between. Humans do have a cyclical nature so a portion of the population may in fact trend back toward the urban lifestyle. The trend back toward the urban life style is also attractive because nobody remembers the dis-advantages of that lifestyle unless you live in New York or Maybe some parts of Chicago. When people live closer together the potential of the spread of pandemic disease goes up. Crime in the city impacts more people because of the higher density lifestyle.

[Jason T. Radice]

Perkins + Will designed it. It look hideous because it is not grown in yet. The thing will be covered with plants and green walls. Maybe. If they can get the plants to live.

[Andrew Garulay, RLA]

This thing is full of so much conflicting logic.

The whole thing is based on a premise:

” In short, the two largest demographic groups in the country, the baby boomers and their children—together comprising half the population—want homes and commercial space in neighborhoods that do not exist in anywhere near sufficient quantity. “

Is this actually true?

It goes on to say that this supposed current demand will fuel the economy because people will buy the housing if only it were getting built.

Clearly, if this were true there would be plenty of folks who would be willing to invest and build these things and take the money of all of these people. Is there a belief that no one has thought about it?

It says that real estate “caused the recession”, yet it believes that to repeat the whole process in urban areas will somehow have a different result and that it will be “sustainable”.

In hard times people are moving to more economically efficient living. What a shock. That gets translated into people really chosing this as the ultimate lifestyle?

The article uses the changing lifestyle of aging babyboomers becoming empty nesters as a reason for them to want to move into this lifestyle, yet they go on to make the point that the milleneum generation, which has not started families yet, will not find any reason to change this living arrangement when they do.

“It is a market-driven way to make the economic recovery sustainable while addressing many of the most serious problems of our time: the health care crisis, climate change, over-reliance on oil from countries with terrorist ties, and an overextended military”.

If it is market driven,why is there a need of government intervention? Who would have realized that health care costs are all due to people not living in dense walkable urban communities? We won’t need to keep the military getting all that free oil from the mid-east. And most of all, it will be so great that terrorists will like us if we just live in cities.

Fortunately, all of the landscape architects that design residential and small commercial landscapes across the country are going to be able to get real jobs designing in between those urban buildings with all native plants. Finally, they will be able to sleep at night! There will be so much work and so much opportunity to express ourselves. Enrollment in LA programs across the country will be a economic boost in itself!

[Thomas J. Johnson]

Yeah, good points… Urban in-fill is an increasingly popular market / model of living that would have real benefits (reduced petroleum usage and increased health via more walking/less driving). However to have a real impact on petroleum usage would require that A LOT of people move into the cities and that the suburbs contract and grow vertically. This kind of growth / change is a long way off. It happens organically.

The biggest problem with the economy is credit. If developers can’t get loans to build projects and would-be home owners can’t get loans to occupy those projects then things are at a stand-still. There won’t be progress or recovery until the financial systems become liquid again and even then, real estate development won’t pick up until employment picks up. People aren’t going to rush out and buy a new home until they have job security. That takes time.

The banks and mortgage companies still don’t know what’s going on. The mortgages and bundles sold to investors were so complex they don’t know who owns / owes what to who. It’s totally FUBAR. Add to that, we haven’t even begun to see the credit card companies cave-in yet. People have been living off of credit cards and if things don’t pick up they are not going to be able to pay them off / they will be forced to file bankruptcy. That will be a whole other fiasco.

The question is: what is going to make employment turn around? We need to see an increase in demand for goods / services to drive employment. Where is that going to come from? Not development. Not government positions. In times like these, historically speaking, war is what turns it around… war instantly creates demand for vast quantities of resources while simultaneously eliminating open hands / hungry mouths. So it goes…

[Thomas J. Johnson]

hhhhmmm… interesting… That surprises me. Perkins + Will obviously do exceptional work and are leaders in their field. I tend to enjoy their aesthetic and appreciate the refined complexity of their designs, however the private residence in India appears disjointed to me. While P+W are masters of geometry, balance and materials, often achieving a weightlessness to their buildings, the India project seems heavy, dark, lopsided and helter skelter.

Vegetated walls will make a real difference and should tie things together nicely. Trees on the protruding deck will also help add mass and balance to the design. It seems like the NYT did a real injustice in not reporting the design intent of the project and presenting the photograph as the finished product. The entire tone of the piece would have changed had they mentioned vast expanses of vegetated walls (just eyeballing it, 3-5 acres of vertical habitat) and terraced gardens with mature shade trees. I wonder what else they left out in order to be more sensational. Seeing as the NY Times has a distinctively liberal slant, this omission surprises me. Could “green” be the new conservative line?

In any case, it seems like a prime time to buy real estate in that neighborhood. The cornerstone has been laid…

[Author]

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