The Urban Land Institute and PriceWaterHouseCoopers has released their 2010 real estate forecast, a market analysis considered by many to be the most reputable in the industry. The first line gives a good impression of the tone of the report:
"More investors recognize massive losses—value declines will eventually total “40 to 50 percent” off market highs, propelled by lagging impacts of the deep recession."Other descriptive words from the first page: "savaged," "debacle," "even worse," "enveloping gloom," "doom," "anemic demand," "carnage," "comatose," "mammoth value busts." (I didn't see "apocalyptic" but I didn't read the whole thing). You get the picture.
However, some smart growth advocates are seeing a silver lining in the fact that urban infill and redevelopment projects have shown to be more resilient than the typically housing on the exurban frontier of metropolitan areas. Kaid Benfield pulled out this quote from the report:
"Next-generation projects will orient to infill, urbanizing suburbs, and transit-oriented development. Smaller housing units-close to mass transit, work, and 24-hour amenities-gain favor over large houses on big lots at the suburban edge. People will continue to seek greater convenience and want to reduce energy expenses. Shorter commutes and smaller heating bills make up for higher infill real estate costs."On the one hand, I see this as a hopeful sign for movement toward a more sustainable economy. On the other hand, I'm a little reluctant to cheer too loudly during a recession. The million dollar question, in my mind, is not what the best investment bets are during the low period (could these not simply be inferior goods?) but what kinds of development will usher us out of the recession entirely and into a new economic paradigm.
The news media is filled with pundits prescribing a way toward "recovery": by which they usually mean resumption of the status quo - getting our savings rate back to zero, pushing the Per Person Vehicle Miles Traveled back onto its upward climb, getting the average square footage of houses back onto the upward trend (and by implication the average screen size of the televisions, so you can see them from across the room). But I don't think this is the only shape economic growth can take.
Jane Jacobs differentiates between "expansion" and "development",
"Expansion and development are two different things. Development is differentiation - new differentiation of what already existed. Practically every new thing that happens is a differentiation of a previous thing. Just about everything - from a new shoe sole to changes in legal codes - all of those things are differentiations. Expansion is an actual growth in size, volume, or activity. That is something different."Development for Jacobs is the "creative destruction" of innovation, taking the raw materials of what we already have and making it better. In many ways the analogy of exurban expansion and urban infill fits these two models of economic growth very well. Instead of growing outward in size, consuming new land and leaving the internal remnants of a disposable core, a sustainable economy would continually augment the developed land. This is not a "steady-state economy" or some other fictitious narrative. The economy would be an organism that evolves, not simply to grow in size and energy consumption, but to grow intelligently to adapt to the conditions of its environment.
I understand that values are not normally welcomed in a discussion about economics, but Wendell Berry lays out the contours of such an economy with the succinct language of a poet,
"We must learn to prefer quality over quantity, service over profit, neighborliness over competition, people and other creatures over machines, health over wealth, a democratic prosperity over centralized wealth and power, economic health over 'economic growth'"