Before I begin, please take second and look at this short video I made of our garden this spring, if you're stressed it will help to soften your day.
After last week’s extremely pessimistic blog and enumeration of many of the problems within the housing market (it could have been ten pages longer), I thought this week I’ll take a look at the issue from a planner’s point of view.
I have been in the development industry for forty years as a designer, planner, and facilitator for my clients. Probably 70 percent of these efforts were focused on some aspect of the housing market, both rental and ownership. My clients were, and still are, merchant builders; some are developers (speculative entitlements are their meat and potatoes), some are builders (the next step after entitlements – they are the three dimensional guys), and some are both (a much rarer breed). During the last three years the speculators stayed low and dumped land like it was a toxic landfill, the builders cut staffs to nothing and many shut down their operations, and the developer-builder (if he managed his money well) went to Hawaii to wait it out (and are very bored about now).
My small part of the development industry creates plans for things that are to come; it’s all about the future. We try to anticipate what the market wants and will need four and five years from now. In 2004 my company had over 150,000 housing units in master plans, neighborhood plans, infill projects and outland parcels. These were great chunks of land that would eventually generate billions in income and thousands of jobs. In some cases these plans would alter the balances within communities, in others they would greatly improve the overall value of housing, but in general there would be significant improvements to a community’s infrastructure. What a difference five years makes and what a catastrophic difference the fall of 2008 made. Without exception every one of those projects either died or was put on hold for the last three years.
But from this development purgatory there are now glimmers of hope and change. (I am drawn to the definition in Wikipedia: The word "purgatory", derived through Anglo-Norman and Old French from the Latin word purgatorium has come to refer to a wide range of historical and modern conceptions of postmortem suffering short of everlasting damnation, and is used, in a non-specific sense, to mean any place or condition of suffering or torment, especially one that is temporary (so true, so true))
I have, both on my desk and underway, residential projects that are being released from purgatory, many were started in 2007. They are being purged of their sins, (more focused and affordable now), responsive to prayer (i.e. markets), and hope for salvation (buyers and renters). A few are being reincarnated, (changed from podium condos to townhomes), and some are just being reborn as rentals. It’s all so religious; it must be from all the praying that’s been going on at the Urban Land Institute and the BIA.
One theory that I have held for years is that the developer/builder is a gambler, the worst kind in many ways. He plays with other people’s money (OPM). When he’s good he clears the table and makes everyone happy. When he’s off his game or the OPM dries up, he walks away confident the game will resume. But at some point he will get very bored, his wife will throw him out of the house, and his back will go out from too much golf. It is about then (or now) that the itch will return, he’ll start doing ROI’s on napkins at lunch, he’ll cruise through a town he knows and sees empty lots begging for attention, he makes that call to the REIT that has had no place to put its money for three years. Our man is getting ready to put money back on the table and, I think, he’s also going to church more.
Stay tuned . . . .