Housing as a place to live

Yesterday, I attended a panel discussion with a couple of real estate developers explaining how their careers are impacted by the current economic climate. The easy answer is "big," but they were gracious enough to fill in the details a bit. One little insight they shared jumped out at me right away. I'll paraphrase:

In a weak housing market, buyers are looking less for a commodity to invest in and more for a home they want to live in.

I think this little morsel is pretty profound, and it may point to a silver lining to all of this that bodes well for compact development.

One of the things a large market has to do to properly function is package information into units that can be effectively compared across the whole line of products. When housing is treated as a market commodity, first and foremost, it's value is determined by how it looks on a spreadsheet. What is the gross square footage? Acreage of the estate? How many bedrooms are there? The quantity is accentuated and the particular quality and intangible livability falls to the wayside. This is a common complaint we've all heard. You know, "they don't build them like they used to."

Sometimes we jump to the conclusion that the proliferation of Mcmansions dotting the landscape meant that this is how people wanted to live in the 90's, but it's just as likely that this is simply how buyers, developers and financial institutions felt they could reasonably expect a good rate of return on their investment. There is a difference between these two propositions.

Chris Leinberger has been insisting for a while that the supply of walkable urban housing is out of whack with the demand. Maybe a chastened and sane housing market, one that places value according to homeowners actual preferences, will start to right the situation.