Sustainable Land Development Today - January 2009 - (Page 10)

SLDT INDUSTRY OUTLOOK By Terry Mock, Tony Wernke, and Greg Yoko Industry Rebound Will Require LE AN PL ced lan Approach Ba PROFIT cording to Nouriel Roubini, former senior adviser to the White House Council of Economic Advisers and the U.S. Treasury Department, “millions of families are now insolvent, into negative equity territory, and on the verge of losing their homes.” As a temporary measure, Fannie Mae froze all home foreclosures late last year, but further action is needed to address the root cause of the problem. More tax rebates to spur spending won’t solve it. Only debt relief will sustainably raise discretionary income to prevent the recession from becoming more severe. Ethical questions of how to “forgive” millions of Americans from what could be construed as irresponsible decision-making abound. Nevertheless, action must be taken or the problems will continue to escalate. There are a number of plans on the table, including allowing Fannie and Freddie to reduce the face value of mortgages, cut mortgage rates and insure inexpensive reworked loans through the FHA. It is likely that a home value adjustment/loan program, new regulations and/or incentive plans will be put in place to help Americans adjust to more sustainable economic models of living. This will result in a trend toward smaller homes and simpler lifestyles for the vast majority of American homebuyers in the next couple years. risis can bring clarity of purpose. The cascading effect of the financial crisis that is rocking the world provides us with a tremendous opportunity to hammer home the fact that true sustainability—balancing the needs of people with those of the environment and financial success—is the global solution to the problems we face. The paragraphs below focus on each of those three areas—people, planet and profit—as they relate to the events that captivate our world today. Within each area, you will see the tendrils that bind them all together. PE C OP ET Credit Availability The bursting of the housing bubble has caused the credit markets to sieze-up like never before, as bad debts at banks have mounted. The freeze reached epic proportions in the fourth quarter of last year, as its impact resulted in a rapid meltdown of the stock market, and the loss of trillions of more dollars in net worth. Retirees became panicked, and the entire financial system came into peril. Congress stepped in by approving a controversial (but unavoidable) $700 billion bailout of our banking system – which specifics have yet to be completely determined or implemented. It remains to be seen whether it will ultimately be enough. The Troubled Assets Relief Program (TARP) has injected $250 billion into banks as an equity investment to offset bad debts, free up cash to lend, and restore confidence in the markets. Credit availability must be provided to the cor- Profit: Land Development Economics There is no need to get bogged down in technical jargon. The economy is officially in the tank. Land development professionals have been experiencing the downturn for two years now – and the whole world has followed suit. What started with the bursting of a housing bubble has become the most severe recession in 50 years, and the worst financial and banking crisis since the Great Depression. Burst Consumer Wealth The fundamental reason this financial crisis is so severe is that Americans have become buried under mountains of debt, while their assets have plunged. The housing bubble helped inflate consumption, as U.S. households took advantage of poorly regulated new financial instruments to purchase more expensive homes and tap rising home equity. Ac10 January 2009 Sustainable Land Development Today “ This is clearly not a normal recession. It is a post-bubble slowdown spurred by the de-leveraging of America’s household and financial sectors. ”

Table of Contents Feed for the Digital Edition of Sustainable Land Development Today - January 2009

Sustainable Land Development Today - January 2009 Contents Our Voice Your Voice The BottomLine SLDI in Focus Calendar Industry Rebound Will Require Balanced Approach What Happened to Fannie and Freddie? Added Value in Entitlements Industry Spotlights Technology Wastewater Innovation Classifieds Advertiser Index Editorial Board SLDT Resources Last Word

Sustainable Land Development Today - January 2009

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