Urban planner Scott Polikov says the old real estate development model is kaput, but developers, and banks, have been slow to realize just how dead it is:
The fundamentals of the “bedroom community” economy have collapsed. Banks have not figured out at what point they will hit the bottom of their financing crisis. The need for radically improved, sustainability-focused strategies has never been more compelling than in this time of looming home foreclosures, $4 a gallon gas, an economy in decline, and broad agreement that the earth’s fragility is not longer just the cry of the fringe.
The new development “secret” is simple but critical: not just to reject our old way of building housing units any place, but to focus early and hard on creating and strengthening whole communities.
Not so long ago, local economic development strategies revolved almost exclusively around recruiting businesses. “Quality of life” was just a buzzword used as the calling card of the local neighborhood activists. But not today! Economic development worth its salt has become firmly connected to place, and to the environment. The quality of life of our neighborhoods, our cities and our regions has now become a bottom-line factor for many business decisions.
More here (via Planetizen).
What will replace it? What is the new real estate model for the creative economy? And what will replace the single family home (a time-wasting machine) as the new form of housing?
Tags: real estate development, Scott Polikov, single family home
September 8th, 2008 at 9:58 am
I don’t think the single family home will ever really be replaced - owning a home with a yard and no shared walls or ceilings is still the dream of many a family out there.
September 8th, 2008 at 11:11 am
I agree with Elizabeth. The single family home will not die.
I predict that smaller lots, smaller houses than what we’ve been seeing will likely become more common. Also, the single-family home with a rental suite / mortgage helper will also grow as cities invite more creative ways to introduce higher density without changing the character of some neighborhoods.
I think we could also see more “single family detached strata” homes where families would have a house not attached to anyone else, but would share “yard” space and other common areas. The average backyard isn’t used that much, so what if four families shared that amount of space?
September 8th, 2008 at 3:59 pm
E and W - Agreed. Single family homes will continue. The question is whether we will continue to “own” them in the traditional way. Remember when everyone “owned” their cars. Then leasing came along. My hunch is, especially with the mortgage crisis and the fact that people are having more trouble selling homes, that sooner or later will move to some sort of leasing structure for residential housing. Home ownership, in the traditional sense, is a big, big fetter on the creative economy. R
September 8th, 2008 at 5:04 pm
I couldn’t agree more. Creativity needs flexibility but flexibility and a ten-year mortgage don’t exactly jive. So while my peers are looking for houses, my fiancee and I are struggling with the thought of tying ourselves to one spot. That said, perhaps there’s an alternative to leasing, one that would still allow for equity to be built, by creating a clearinghouse for trading spaces/places built on reputation/trust models between homeowners who want to move somewhere else but retain a stage in the ground in one place….
But then again does our broad definition of the creative class retain the same characteristics as they move from one life stage to another? Does a post-university grad have the same desires than a newly married couple? Creativity may be common across both but does it supercede what may be an instinctive desire to nest? I’m in that transition now so I’ll let you know!
DH.
September 8th, 2008 at 6:09 pm
DH - I am a fifty year old married man. I rented my house in Pittsburgh from Carnegie Mellon. We bought in DC, and sold. We own our house here. The reason we bought both places is we could not find a rental we liked. We would prefer to lease if we could find what we want, set up the way we like it. But that is precisely what we could not find. I have friends who gave up their houses for rentals as soon as the kids went to college.
September 8th, 2008 at 6:35 pm
I believe that most suburban residential developers are risk-averse. A house is a high-ticket item of variable liquidity, a new development even more so, most of the work is funded with debt, and a big failure could drive a builder out of the business for good. Moreover, I think that residential home construction attracts folks who don’t have that great an education. Thus, their options for a good second career are limited. This gives an incentive to hang on to the single-family-home formula that has worked for the last 60+ years. I think that suburban developers would rather evolve new designs for the single family home than try something truly novel.
New designs may include smaller units, luxury materials, ‘green’ neighborhood layout, access to mass transit… And as Dan Herman has noted, we also could redesign financing and ownership arrangements to increase liquidity of a major investment.
September 9th, 2008 at 2:47 am
Why are Elizabeth and Wendy so convinced that detached “family” homes will remain so popular? Birth rates are declining in developed countries as it becomes more and more vital for women in couples to work as well as their partners to afford the lifestyle they want. This means more education, which means deferring having children. Why would a childless couple be so keen on a detached “family” home in the ‘burbs? Nostalgia and prejudice, yes, and space requirements definitely (to fit the tumble dryer, pushbikes, cars, three televisions, comic book collection etc - seen that film “Juno”? Precisely…), but I think assuming that the detached four-bed suburban famlee home with too much garden space (with will probably be paved over for “low maintenance” anyway) smacks more of prejudice that it does of reasoned analysis.
Here the in the UK where space is at a premium, I’ve read comment saying that developers are no longer going to build the city centre apartments which fuelled the housing boom until 2007. Around 40% of these remained empty at any one time as they were mainly bought on cheap “buy to let” mortgages, or just for investment rather than for living in. As a result of being stung, developers now will probably only touch greenfield sites, which means we can kiss goodbye to residential-led regeneration of inner-city areas.
Is it worth just abandoning failed inner city areas, by negotiating planning consent for greenfield sites only if developers agree to purchase brownfield and inner city development sites and return them to parkland? Sure it’s not very space efficient, but these areas may as well be desert at the moment, judging by the streams of traffic that bypasses them on freeways etc.
September 9th, 2008 at 11:23 am
As others have said, the single family home is not going away. What is going to change is the geographical layout of communities - the massive suburban tract development is the dead model that Scott Polikov is talking about.
The new model that developers and banks need to get their heads around is the mixed use layout, where single family homes are plotted on grids rather than meandering cul-de-sacs, and retail is sprinkled within the community, rather than outside the perimeter.
The funny part is that this is not a new concept - it’s the way we used to develop before the 1950s. Ironically the “creative classes” are flocking to the “tried and true” developments.