Thinking of joining the exodus of people to more dynamic Sunbelt metros with lower taxes, better schools, and cheaper housing? Places where past generations haven’t already extracted all the benefits and left behind the debts? Places where a suburban lifestyle can still be had? Well beware, because as this http://www.charlotte.com/253/story/397430.html article shows, some of the problems that may be coming to a suburb near us have already hit one of the most prosperous metros in the country. And it makes one wonder how this country of hyper-mobile, non-citizen consumers will cope with a serious recession if it comes.
“A band of new suburban neighborhoods that held promise for thousands of Charlotte families is now struggling with crime, blight and falling home values,” the Charlote Observer reported. “The best of them show subtle signs: Vacant houses. Overgrown weeds. Trash piled at the curb. The worst of them already resemble decaying urban neighborhoods that keep police and housing inspectors busy — and cost Charlotte millions to repair.”
In a city with a low and stable overall crime rate and (until now at least) prosperous economy, crime has soared and gang activity increased in the new high foreclosure suburbs. Some of them are home to ex-New Yorkers. “’I thought I'd bought a home in Pleasantville,’ says Talbot, who moved from New York last year. ‘I never imagined in my wildest dreams that stuff like this would happen.’” Stuff like gunshots in the neighborhood. “With all the foreclosures … there's no way I could sell my house for what I have in it.”
What is happening is a rapid change that might be familiar to those growing up in New York City and nearby urban areas 40 or 50 years ago. “Taxpayers must cover the increased cost for police, housing inspectors and other government services in these neighborhoods. Sinking home values mean less tax revenue. More students from lower-income families are moving to schools near these neighborhoods that are increasingly becoming rental communities.”
But with a difference. “A lot of these neighborhoods have basically become giant apartment complexes without any management to maintain the property and keep tenants in line.” “The new trouble spots are spiraling far faster than the inner city did.” “The suburban hot spots face similar corrosive forces of crime, decay and absentee landlords. Yet they're more isolated, away from social services and high-frequency bus lines.”
Recent coverage of the effects of the deflating housing bubble has focused on Midwestern metros and urban neighborhoods with deep and longstanding economic problems, and “subprime” mortgages. But “subprime” just means the borrower had a bad credit history before they got the mortgage. There will be many more people who end up with a bad credit history because they got the mortgage, in places one might not have expected. It’s pretty much in the bag.
In theory, the end of the housing bubble could mean a better life through cheaper housing, with more integration. But not if neighbors don’t band together to improve their communities. Not if racial and ethic conflict sets off flight. Not if local governments allow buildings to be held vacant and decay without aggressive code and tax lien enforcement. The suburbs of New York are occupied by the descendents of those who chose to move rather than improve in the cities in the 1960s and 1970s. Let’s consider this a chance to do a better job.
What is happening locally – foreclosures – is just a symptom of what is happening nationally – a possibly significant decline in the standard of living caused by 25 years of growing debt ending in a five-year borrowing blowout. Debt that was used to paper over a growing inequality of income that led some people to borrow just to maintain their past living standards, and a keep-up-with-the-Jones consumption frenzy that led others to borrow in order to have more and more. The U.S. standard of living can go down quite a bit and most Americans can still be quite well off – the envy of the world, in fact. But with a certain material lifestyle now comprising the very essence of people’s family and social relationships, the goal of their vocations, the very value of people’s lives, the psychological fallout could be ugly. “A Chicago study found that when the foreclosure rate increases 1 percentage point in a neighborhood, its violent crime rate jumps 2.3 percent.”
I’m not ready to join the guns, ammo and canned goods crowd, and I expect things to be far worse elsewhere. But a recent comment on this http://thehousingbubbleblog.com/index.html blog was enough to make me wonder about the worst-case reaction to a significant recession – like the one we had the last time there was a real estate collapse in concentrated (then urban) areas and soaring food and energy prices – the 1970s.
“Don’t rule out surprisingly large segments of previously docile and meek sheep becoming restless, insistent, and militant. This isn’t a nation of family and country oriented patriots like 1930. This is the secular ‘entitled’ and ‘me first’ instant gratification oriented population that has learned to distrust and cheat the government in 2007…Can you imagine, in your wildest dreams what millions of debt slaves who have just lost their jobs, homes, cars, meager savings, and hope, might support?”
Sure, blaming the poor, the immigrants and the foreigners for all their problems, and cutting assistance for the poor (but not spending on anyone else) and state aid the New York City schools (but spending more on higher spending schools elsewhere). That was, after all, the response to the milder 1990s recession. All while blaming either gouging greedy oil companies (Democrats) or environmental regulations (Republicans) for the fact that it now costs more to fill up the gas tank on an SUV and heat a McMansion.
More and more, I think we need a different generation of leaders from top to bottom, as we can no longer afford a government, business and even non-profit leadership that serves itself and narrow groups of supporters and avoids blame by pandering to people’s worst instincts. Finding out what people have done with their personal finances over the past few years, perhaps it is no surprise our elected officials are what they are and do what they do. Something for nothing has sold in every marketplace. And given what has gone on, one wonders if anyone who is willing to contribute anything to anyone is just a mark to be mocked.
In any event, this could be an interesting couple of years. Hopefully it won’t be the 1970s again for New York City. But it could very well be the 1970s for someplace. Might as well concern oneself with the place one already is, rather than try to buy into someplace supposedly better.