Fnord.

As a renter in one of the nation’s most overpriced markets, I’ve been reading about real estate since before we moved here. Piggington, Calculated Risk and many others. It doesn’t take too many graphs like this one to make one wary:

Anyway, a couple of days ago a thought-provoking essay “The Next Slum?” was posted on The Atlantic positing that the detached-house suburbs would become the new ghettos:

…A structural change is under way in the housing market—a major shift in the way many Americans want to live and work. It has shaped the current downturn, steering some of the worst problems away from the cities and toward the suburban fringes. And its effects will be felt more strongly, and more broadly, as the years pass. Its ultimate impact on the suburbs, and the cities, will be profound.

Arthur C. Nelson, director of the Metropolitan Institute at Virginia Tech, has looked carefully at trends in American demographics, construction, house prices, and consumer preferences. In 2006, using recent consumer research, housing supply data, and population growth rates, he modeled future demand for various types of housing. The results were bracing: Nelson forecasts a likely surplus of 22 million large-lot homes (houses built on a sixth of an acre or more) by 2025—that’s roughly 40 percent of the large-lot homes in existence today.

For 60 years, Americans have pushed steadily into the suburbs, transforming the landscape and (until recently) leaving cities behind. But today the pendulum is swinging back toward urban living, and there are many reasons to believe this swing will continue. As it does, many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s—slums characterized by poverty, crime, and decay.

It’s an interesting essay, and I recommend it to you. I debated posting it, but it kept running around my head as I tried out his arguments, so perhaps that’s a good sign. His data seem solid, but the argument he makes about desire to return to urban life is more sketchy. Personally, I couldn’t agree more and often have the same debate with exurb co-workers, but that’s beside the point. Question is, do large masses of people really want to desert the burbs and go urban?

Even if they don’t, will economics force the issue? The article quotes Arthur Nelson of Virginia Tech as projecting a surplus of 22 million suburban homes by 2025; 40% of the volume in existence today. That sort of surplus would crush pricing, and the article also explains the progression from vacant to crime statistics; it rapidly becomes a self-reinforcing rout.

If you read pessimists like JH Kunstler or The Oil Drum, this sort of scenario is old hat. I was quite surprised to see it in the mainstream media, well backed up with statistics and experts. Chaotic times ahead, I fear.

This entry was posted on Wednesday, February 27th, 2008 at 8:31 am and is filed under Essays - other people, News, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.