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Suburbia, Jobs and Housing   (Lloyd L., December 10, 2007)

Within the white-phosphorus-like cloud of doom surrounding the housing lending situation may be found some less-discussed socio-economic questions. For example, the ever-widening concentric circles (suburban expansion) around major employment centers may for the first time in generations be halted. The previous argument that housing amenities and ownership benefits would make up for distance from work and culture does not hold up well in this era of falling residential asset values. OK, so culture doesn't matter, says Joe 6-pack; but that 100-mile round trip commute at $4.00 a gallon fuel does matter.

Some might argue that "people always need housing". Yes, true, but not necessarily larger, more expensive, distantly located housing. "Suburban amenities" can only be stretched so far, and the safety nets of sound local government, schools, and related are certainly not available everywhere. Are there housing alternatives? Of course, but these are generally within closer fringes of the urban centers, and are the places people were generally fleeing for the suburbs.

What might all this mean in terms of urban settlement patterns? Well, one part of it is readily seen in high-amenity communities, where wealth is increasingly concentrated, and housing values and choices reflect this. The obsessive constant remodeling of homes in "better" locations gives evidence that in these areas, at least, buyers will continue to pay more and more for the limited choices available. Because they have the money -- and can readily out-bid existing (or potential) residents with less to spend (or lose).

This very same pattern could be seen (change the number of zeros of course) if the disaster that suburban housing excesses has become reverses the movement outward. It is very, very significant that as of today a smaller home in relatively desirable close-in neighborhoods may well have a far better outlook for maintaining value than one in the new subdivision 60 miles distant. This perception of asset safety will remain important. At the moment, the concept is being shaken to bits with respect to many "emerging communities" around the country.

So where does this leave our diverse communities within the typical urbanizing region?

-- A return of families to the older, closer fringes circles of urban employment centers may well occur if suburban asset values plunge. This could prove beneficial, in fact; the inner city residential areas could become more like they were a century ago -- multicultural, social and economically layered; enjoyed not feared and despised. It may be painful, but on balance should be a favorable trend.

-- Our fragmented, balkanized patterns of public services and utilities might actually be rationalized in a sensible manner -- without the frantic competition for revenues and "home rule" that drives decisions today. Transportation investment, for instance, might be more easily allocated in terms of urban center services versus additional streets and highways to serve the fringes.

-- There will be winners and losers, naturally. The minorities of all races and classes that are packed into some of these inner city areas will increasingly feel the pressures of rising costs of occupancy as areas "recycle". Where will these people go? What conflicts are certain in this environment?

-- Those moving in (new or returning) will also perhaps initially be trading one set of inflated housing prices for another -- but the long-distance home-to-work issue will be mitigated, and presumably inner city services will (eventually) prove more satisfying as well.

-- Positive expectations of potential reasonable profits inside the urban centers can encourage housing investors, developers, and financiers to underwrite and build new housing where before it was far too easy to simply keep up the suburban production cycle. Local governments might actually rise to meet the challenges of internal, positive housing growth that is not produced exclusively for the rich or the poor (the only groups served today in close-in areas).

Does all this happen simply as a function of the current "lending crisis"? Of course not. For this nation to actually use the present problems as a springboard to something better will require intelligent use of public policies in the areas of taxation, allocation and use of revenue. Our various population segments will have to make adjustments in their views of what constitutes "the good life". The concept of a "throwaway" cycle of employment center services and housing choice will have to be modified.

This is in fact a social minefield of considerable size. Keeping growth focused on inner circles of the employment centers, similar to what some European nations have done, is almost certainly not the answer -- witness the civil unrest in high density housing centers in France, England, and others. Forced redistribution or relocation of population goes against national traditions. Crime and the fear of crime is not to be dismissed as a major determinant of housing choice.

From all this I draw a single bit of solace. The "lending crisis" will slow to a large degree the continuous movement out from city centers to support a financial bubble that has no justification. The side effects will bring at least a few of the players to their senses -- at least for a while. Progressive local communities might well be able to fashion a modified strategy of social and economic health in the process. It is, in effect, a window. Small, obscured and fragile -- but a window nonetheless. Let's see where this goes.

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