Monday, January 22, 2007

Plum Creek v2.1

Most Maine newspapers reported this weekend that Plum Creek will revise its development plans for the Moosehead region once again, and that public hearings on the proposal will be postponed indefinitely as a result.

Plum Creek offered no details on the scope of the plan's revision, but it does hope to submit changes to the Land Use Regulation Commission within a month.

In the meantime, it seems a fair speculation that rising interest rates and concomitant cooling of housing markets may have knocked some wind out of Plum Creek's schemes. Even though this is a "30 year" development plan, immediate development would have maximized the present value of Plum Creek's land: they had hoped to finish the proposed housing developments within the next five to ten years.

Now that interest rates are rising again, that schedule of construction will coincide with a period of comparatively low demand for new homes. Plum Creek will either have to charge lower prices for its real estate, or constrain supply with fewer houselots. Choosing the latter option will be more lucrative for the company while also appeasing the plan's many critics.

My hope and prediction is that the next plan from Plum Creek will have fewer houselots, and those that remain will be clustered closer to Rockwood and Greenville.

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