Shades of the Long Emergency

I think this is a real estate correction. But like previous corrections, it will be ugly. It will be awhile before the U.S. shakes off its oil dependency, so I don't see this as quite the beginning of the problems of passing peak oil production along the lines outlined by James Howard Kunstler. Still, much of the real problem in loss of real estate economic value experienced currently is in the suburbs. Of course, you can make the point that so is the majority of construction-housing starts.

In any case, strong market center cities are maintaining more of their value. Even so, prices and sales are declining in center cities, with only A projects going forward. (A being defined as in the absolute best locations, likely downtown. B projects are defined as at subway stations but not downtown.)

See "Suburban decay stuns city leaders: Council, police seek to crack down on those who let homes decline," from the Charlotte Observer. From the article:

Charlotte City Council members say they're surprised to learn how far the city's starter-home suburbs have declined in just a few years. They're calling for new efforts to revive dozens of subdivisions -- and at least one builder is pledging money and manpower to help. ...

It's about time politicians noticed, say some residents living in these neighborhoods, built over the past decade across northern Charlotte and in parts of the east and southwest. "I feel like I'm living in an old ghetto," says Roscoe Henderson, who has watched his 4-year-old Peachtree Hills neighborhood crumble. "You never know when somebody's going to come kick your door in. And it seems like the city is just ignoring our problems."

A four year old neighborhood crumbling? Wow, that's the shortest useful life of new construction I've ever heard of... Interestingly, the Charlotte Observer started reporting on this in March 2007, which is months before the subprime mortgage financing debacle became glaringly apparent. See "Starter homes, sad endings: Number of foreclosures climbs as 1st-time buyers lose low-priced houses," and all the other articles linked within this series, which focuses on the high rate of foreclosures on houses constructed by Beazer Homes.

But the descriptions remind me of Houston in the late 1980s, and the post-Savings and loan debacle, where easy regulation and cheap money led to a massive amount of overbuilding throughout the United States, including cheap little shopping centers like the one on Brentwood Road NE, where the DMV office is, or a strip set of stores at 15th and D Streets SE, a block from the Capitol Hill Safeway.

And it reminds me of the inner city HUD loan flipping frauds too.

Todd Sumlin/Observer Staff. CMPD officers respond to a call in the Windy Ridge neighborhood