Flipping the Exurbs

By Fester:

I spent a good chunk of yesterday meeting with some relatives and driving through the Washington D.C. exurbs.  And this is an area that is in trouble beneath the veneer of new construction, fresh paint and large neon-signs.  It is also an area that has historically voted Republican for economic grounds as it is an extraordinarily anti-urban and local educational arbitrage environment.  This is a Republican base area. 

Yet it is an area that is looking to flip because the pain is too high. 

We drove through my hosts' subdivision and it was massive but incomplete.  Almost one thousand houses at price points from the mid 200Ks in the New Urbanist portion of the 'village' to million dollar large single family detached houses with three and four car garages are in this project.  All of these houses were built in the past five years, and everyone had been on the HELOC treadmill of drawing out equity to finance current consumption.  However the project lies incomplete as the developers' financing for the next round failed.  The Home Owners Association can not afford a second pool, so there is a massive muddy hole in the ground where construction has stopped.  Seventy houses were foreclosed in the past year.  Many more are somewhere in the foreclosure process.  All of these homes have decreased in value from both the general market drop and the local negative externality of having an empty house nearby. 

The pain is widespread and real, and the second order impacts will be as large or larger than the first order impacts as the entire local/basic economy was structured on new construction with high costs that could only be justified by an increasing population with increasing incomes.  That population is not coming as the next wave of houses will not be built for another decade.  The franchises are high end franchises that are only viable once their consumer bases have taken care of their fixed costs, their quasi-fixed discretionary costs (braces for the kids, swimming lessons etc) and their core discretionary spending is satisfied.  The franchises are based on capturing the truly disposable income of the area.  The combination of fifty mile commutes in a $4.11/gallon environment, and job uncertainty has dramatically decreased local unattached disposable income.

The decline of the minor local business community and the concurrent decline in housing values will devalue the local educational arbitage of having a 'superior' sclhool district just a little bit further out.  This will be an escalating and viscious cycle.

When I had lunch with my relatives who are base Republican voters (white, middle age, self-identifying as Christian), they brought up politics and asked if I was working for any candidate this cycle as they know I had done that work in the past.  They asked how Democrats and liberals saw the primary process and what I thought about Obama and Clinton and then one announced their vote for Obama, a first time Democratic primary voter in over a decade because the pain had been too bad, and something different was needed.

I can see a lot of people coming to that conclusion in the exurbs.  Something different is needed to resolve their problems and the superstructure in which those macro problems reside.  I don't think Obama is that solution they are seeking, but in the short term, this need for something different could swing the exurbs from a dominant Republican territory with attendant massive margins that somewhat offset the urban advantages Democrats enjoy into mildly Republican districts that are insufficient to offset the waves coming out of the cities.  People are in pain, or they see enough of their social networks in pain to want to try something different.  And it is that tropism that could provide for a blowout this fall. 

Comments

[Enlightened Layperson]

The trouble, of course, is that these problems are deeply rooted and will not go away with a change in Presidency. Sooner or later residents of the exburbs will stop blaming Bush for their problems and start blaming his successor.

[shano]

Who DO you think will be able to solve this mess if not Obama?

Because he TRIED to pass legislation to head off this mortgage crisis two years ago. He has an inclusive plan for alternative energy and green energy solutions.

It is what we 'environmentalists' have been talking about since the '70's. Houses can be built to save energy, or even produce energy with a solar panel. (instead the rage was granite countertops-about the same price as a solar water heater)

Why does a retired couple need 4,000 square feet? Why is zoning so out of whack from the needs of people? Whatever you think about Prince Charles, the people who live in his 'village model' developments have a higher quality of life than Americans living in the 'burbs.

People used to take the train, used to be able to walk to buy groceries, etc. Our community planning needs to be re-tooled for the coming energy problems. We have been saying this for decades.

I guess it just takes a bit of pain for people to understand what we have been saying. Reduce, reuse, and recycle. And build communities for people instead of cars.