The development model is finished

An interesting graph on the state of the housing subdivision industry in America posted at the Daily Reckoning.

This is the lowest rate of development since statistics began in the 1950’s, which is to say the time when the modern development system was created. A new model of urban growth is now not only a better idea, it has become a necessity. Only those communities that adopt emergent urbanism will get out of this crash, and hopefully they will adopt this new urbanism deliberately instead of being swarmed with squatter settlement.

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7 responses to “The development model is finished

  1. Only those communities that adopt emergent urbanism will get out of this crash

    This sounds like wishful thinking. There won’t be squatter settlement, as the problem is too much housing, and a mismatch in finances between buyers and lenders. Every foreclosure ends up being resold to someone who will live in it, or rent it out; and banks are slow to foreclose, which lets people stay in housing they can’t afford. Once all the financial mess is cleared up, there will be plenty of housing; but eventually demand will pick up again. There’s nothing about this crash which would particularly encourage more sensible development patterns in the future.

  2. Mathieu Helie

    “Too much housing” is an aggregate observation. The specific reality is that there are useless houses in the wrong places, and a housing crisis in the places where housing is needed.

    There are already squatter settlements in these places. Denial is a dangerous activity.

  3. Mathieu Helie

    Not worth making a new post about, but still interesting. A second child star of Slumdog Millionaire saw her home demolished by the authorities. The reason was to build a pedestrian overpass.

  4. Matthieu – ‘“Too much housing” is an aggregate observation. The specific reality is that there are useless houses in the wrong places, and a housing crisis in the places where housing is needed.’

    An excellent observation that explains a lot of the disconnect between those who take an exclusively supply-side or demand-side approach to explaining the housing bubble. On one hand you have libertarian-leaning pundits who argue that growth controls need to be removed to allow for more suburban subdivisions. On the other side are a lot of smart economics commentators who speak only to how financial innovations drove demand without giving so much as a nod to the broken business model of real estate development. Both groups are partially correct, in the aggregate, but neither side has a grasp of all the relevant issues – in finance, housing, and land use policy – to make sense of things from a micro level. It just seems like there’s a void in public discourse (and consequently public policy) at the intersection of these fields.

  5. Interesting topic to think about. I think the main thing to consider here is the end of an entrenched system. There was enormous complexity surrounding the act of paying thousands of dollars for a piece of stone to put a cutting board on and appliances that look like something out of a machine shop.

    The people that were involved in the system, developers, retailers, lenders, HGTV….etc weren’t conservative by nature, but they were making a killing and happy to keep the racket going.

    In my mind, a combination of their greed (overbuilding), the sustainability movement (maybe wishful thinking), and a cultural shift away from suburbs (perhaps sex and the city was worth it after all) destroyed demand.

    The thing is, all those people are still out there. They didn’t magically disappear, and they’re in three camps.

    The first group is trying to wait out the storm so they can start building suburbs again.

    The second group is trying to draw funding for projects that were innovative 20-30 years ago (or 80-90 years ago, depending). These are the types that hate New Urbanism and TOD but figure they might as well give it a try.

    The third and by far the smallest group, is looking for new ideas, innovating, trying new and different things out. These people might try to build a development with the ideas of emergent urbanism, but I suspect they’d fail.

    In fact, for emergent urbanism to succeed, all three groups will have to fail. The builders and financiers will have to reintegrate into society. Instead of “building a development” they’ll need to use their expertise (which is actually quite substantial), to incrementally develop a place.

    I suspect our downturn is severe enough that the developers will fail to kick start things, but I’m not quite certain how likely a community would be to adopt a plan like emergent urbanism. The idea, while not quite fresh, would need an entirely new legal framework. There aren’t any guidebooks for implementation, or really many books on the matter at all. Honestly, the only one that comes even close is Christopher Alexander’s A New Theory of Urban Design.

    If emergent urbanism is adopted in the near future, it will likely only exist in places where government has given up on trying to regulate what is going on.

  6. Those record low rates for housing starts reflect all of the US. Do you happen to have something that shows certain types of housing starts or housing starts in urban locations are up, or at least down far less than the overall numbers?

  7. Pingback: Housing starts on a graph, or more evidence that we’re due for a new paradigm | EcoSilly

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