Friday, February 22, 2008

The Future of Suburbia

Prof. Christopher Leinberger has an interesting article about the imminent decline of modern American suburbia. I found it thought provoking, but I'm not certain I buy his central thesis. I think he is ignores to a certain extent the changes modern technology has made possible in time allocation.

Assuming arguendo that his thesis is correct, our house will likely retain its value. We are in a close in, upscale urban setting of single detached homes. Tiny single detached homes, but they are nonetheless the models of the American dream house. Our situation combines the best of urban and suburban life. However, thanks to technological advances, I spend two to three days a week working completely from home. On those days, I have no commute time. Most of my peers are in a similar situation. Working from home is increasingly common. Those who do maintain actual physical offices have moved them from the inner city out to where they dwell, also trimming commute times.

As for the collapse of new development housing prices, all kidding aside, we've seen it before. Developers by their nature tend to be optimists and every seven years the real estate market cycles. If you are living in a boom area the downcycle may not be noticeable, but it is always there. Supply and demand plays a major role in real estate. When apartments are over built, rents decline. When houses are over built, the developer heads into bankruptcy, the units get sold for pennies on the dollar and a subdivision that was planned to be upscale becomes the land of section 8 housing.

Further, I think it the height of folly to discuss national trends in real estate. Real estate is about as local as you can get. To have any idea what the future holds, you have know what the local conditions are. "Location, location, location" remember?

Also, in the interest of a provocative article, the good professor looks too far into the future. Fifty years ago the brightest pundits predicted a golden future for Detroit. Today's reality is somewhat different. Fifty years from today, the trend might very well be the reclamation and restoration of today's much vilified McMansions.

{This is a first draft, I may come back and revise}

No comments: