The lead article in this Sunday's New York Times Business section was entitled "Ruins of an American Dream". The accompanying picture, shown in the article, was of fully framed but incomplete single family homes in Merced County, California; the far fringes of the San Francisco Bay area. Selling prices on average in Merced County have fallen by 50% over the past year... 50% is a number never, ever achieved in American history. The Great Depression never saw anything approaching this decline in housing values. We are in new, uncharted territory.
As I have quoted in the past, Jim Kunstler's most famous line is that drivable sub-urban development "represents a prodigious, unparalleled misallocation of resources". We are just beginning to realize how much of a mistake we have committed as a society. We have put in place a series of subtle but effective subsidies that make it economically idiotic to do anything but to build drivable sub-urban development. We have and continue to charge drivable sub-urban infrastructure at prices that would have to be increased by 10 to 20 times for them to cover the costs our society have expended to extend the roads, cable, power lines, sewer, and water lines and ever other of the 15 categories of infrastructure. Then, just to make sure we got a mono-culture of development, we have and continue to make low density, car-dependent sprawl the law of the land through our zoning.
Those houses pictured in the article will all have to be bulldozed. They have been exposed to the sun and rain for over a year and given the cheap building materials used today. They are now structurally ruined. What we have not yet come to realize is that the same fate will await tens of thousands of foreclosed and soon-to-be foreclosed completed house on the fringe. The market pendulum began to swing back toward demanding walkable urban development over the past decade or so, well before energy prices exploded, but the subsidies and zoning laws (not to mention NIMBY opposition) continue to stunt the efforts to give the market what it wants... and needs.
This country is just beginning to recognize that we have been going down the wrong path over the past 10-20 years. The market and the world have changed but the subsidies and laws that dictate how we invest 35% of the country's wealth have not. We have to first recognize that we have a massive problem; only then can we begin the painful process of correcting it. This is going to take a generation to do but the longer we ignore the extent of the problem, the more painful it will be.
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Christopher B. Leinberger is a land use strategist, developer, teacher, consultant and author, helping to make progressive development profitable. He is currently a Visiting Fellow at the Brookings Institution in Washington, D.C. He is the author of The Option of Urbanism: Investing in a New American Dream from Island Press.
