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Thread: Creating a new mechanism to finance development

  1. #1
    Cyburbian
    Registered
    Mar 2009
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    Salt Lake City, UT
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    Creating a new mechanism to finance development

    I believe that the financial mechanisms used to finance development in the past are dead and not coming back. I read something recently where a pundit was stating that the "financial economy" (Wall Street) and the "real economy" (Main Street) were no longer tied to one another and as long as we hope for Wall Street to provide financing for new development, we would continue to be in a development recession. I believe that financial economy that financed development in the past just doesn't exist anymore or at least, has no desire to participate any more. Therefore, I believe that to rise out of the development recession we find ourselves deeply within, we need to find or invent new financial mechanisms to finance development.

    Some initial ideas.

    I believe that conventional home ownership is going to be available to less families in the future and only the upper middle class and the wealthy.

    I believe that we need to develop new models of rental housing such as in the early part of the 20th Century where neighborhoods of single family housing -- much like the old "company towns" are devoted to rental housing rather than having it clustered in multi-family housing developments.

    I believe that long term leases may be more useful than mortgages.

    Finally, I believe that FHA, Fannie Mae and Freddie Mac need to be completely scrapped and that development financing needs to be seen no longer as a tool of investors and more as a tool of "Main Street" oriented regional financial institutions that have more of stake in the communities that they lend within.

  2. #2
    OH....IO Hink's avatar
    Registered
    Jan 2005
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    Hang on Sloopy...land
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    With politico's trying to tighten the budgets in every department, development is going to be getting less public support in general. Overall I don't know if that is a completely bad thing. I look forward to when a private business owner can have a go at success in this capitalist world of ours without taxpayer support.

    Less businesses will take a chance, and only the strong will survive. We will see more reuse, and less new construction. I would like to believe that this will create a strong urban fabric, but I am not that naive. I am sure it will create unconnected blighted areas and more gentrification of the suburbs.
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  3. #3
    Cyburbian The One's avatar
    Registered
    Mar 2004
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    Where Valley Fever Lives
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    7,136

    Well......

    I'm a little surprised that some of the larger home builders are still around. There must be some kind of "old style" financing system still in place for them to keep building developments in this economy.

    Check out these numbers for home price declines over the past three years:
    as found at http://www.bloomberg.com/news/2010-1...ler-index.html
    Last edited by The One; 28 Dec 2010 at 11:30 AM.
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