Building the Next Boom--and Getting it Right This Time
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Last week I wrote that, for the residential construction market, 2015
is going to be a lot different from 2005. My point was that, to
whatever degree the housing sector recovers, the way we build is
changing. The segments of the market that have weathered the downturn
best--green building and urban infill--give the strongest clues about
the direction the industry will take as it recovers. With the huge
overhang of existing houses on the market--and resulting fire sale
prices--no one is going to buy a new house that isn't a lot better than
what they can find already standing. A story in the June 2010 issue of
The Atlantic argues that location,
transit, and community infrastructure are the keys to the kind of
housing worth buying now.
Over the past decade,
most house building occurred on the suburban
fringe, in large part because that’s where houses could be built most
easily and quickly. But now that the bubble has popped, we can clearly
see that underlying demand in these areas is extremely weak, and
oversupply is massive.
Nationwide,
houses on the exurban fringes are now generally priced
below the cost of the materials that went into building them. That’s
usually the first step in the creation of a slum. Owners have no
financial incentive to invest in their houses if they will not get that
investment back upon resale. Developers have no financial incentive to
build in those areas either.
Urban-style housing in walkable
neighborhoods—including those in
the inner suburbs—is what’s in demand today. And for a variety of
reasons, that demand will intensify in the coming years. Only by serving
it can the country kick-start growth in an enormous and essential part
of the economy
Developer- and community-funded
walkable infrastructure and transit links will not only make new housing
worth buying again, but may also be essential to reviving the economy
as a whole.
... investment in rail, bike, and walking
infrastructure, laying the groundwork for developing the kind of housing
that is now in demand, is essential if we want to restore the economy
to health. In the mid-to-late 20th century, the growth of the suburbs
propelled America’s economy. Growth of walkable neighborhoods in cities
and suburbs can play a similar role in the decades to come, sparking
growth in the broader economy—but only if we start preparing today.
I
couldn't agree more. --B.D.S.
