A new housing development in Lathrop in 2006. One in eight houses in the town are now in some stage of foreclosure.
By Timothy Egan- New York Times- Februrary 10, 2009
LATHROP, Calif. — Drive along foreclosure alley, through new planned communities that look like tile-roofed versions of a 21st century ghost town, and you see what happens when people gamble with houses instead of casino chips.
Dirty flags advertise rock-bottom discounts on empty starter mansions. On the ground, foreclosure signs are tagged with gang graffiti. Empty lots are untended, cratered with mud puddles from the winter storms that have hammered California’s San Joaquin Valley.
Nobody is home in the cities of the future.In a decade, they saw real property defy reality in real time in these insta-neighborhoods that sprouted in what had been some of the world’s most productive farmland.
In places like Lathrop, Manteca and Tracy, population nearly doubled in 10 years, and home prices tripled. After inhaling all this real estate helium, some developers and their apologists in urban planning circles hailed the boom as the new America at the far exurban fringe. Every citizen a homeowner! Half-acre lots for all! No credit, no problem!
Others saw it as the residential embodiment of the Edward Abbey line that “growth for the sake of growth is the ideology of the cancer cell.”
Now median home prices have fallen from $500,000 to $150,000 — among the most precipitous drops in the nation — and still the houses sit empty, spooky and see-through, waiting on demography and psychology to catch up.
In strip malls where tenants seem to last no longer than the life cycle of a gold fish, the bottom-feeders have moved in. “Coming soon: Cigarette City,” reads one sign here in Lathrop, near a “Cash Advance” outlet.
Take a pulse: How can a community possibly be healthy when one in eight houses are in some stage of foreclosure? How can a town attract new people when the crime rate has spiked well above the national average? How can a family dream, or even save, when unemployment hovers around 16 percent?
Yet if these staggered exurbs, about two hours inland from San Francisco, were an illness, they would not quite be Abbey’s cancer. Though sick, foreclosure alley is not terminal. This is not Detroit with sunshine. It will be reborn, remade, inhabited. The question is: as what?
Nationwide, a record 2.8 million homes received foreclosure notices last year — up 119 percent from two years ago. Just under 5 million homeowners — 1 in 10 mortgages — owe more than their houses are worth. The impulse is to walk away. Surrender. And many have.
What they leave behind, along with the gang presence, the vandalism and the absence of vested owners, is a slum. A new slum. In an influential article in the Atlantic in 2008, the writer Christopher B. Leinberger predicted that the catastrophic collapse of the new home market could turn many of today’s McMansions into tenements.
I’m not sure of that. After several days in foreclosure alley, this broad swath of the Central Valley that has been rated by some economists as the most stressed region during the Great Recession, I can’t see such apocalyptic forecasts coming true.
Yes, huge developments are empty, with rising crime at the edges, and thousands of homes owned by banks that can’t unload them even at fire-sale prices.
But through it all, the country churns and expands, unlike most other Western democracies. That great American natural resource — tomorrow — will have to save the suburban slums.
Through immigration and high birth rates, the United States is expected to add another 100 million people by 2050. If you don’t believe me, consider that we’ve added 105 million people since 1970. This is more than the population of France. More than Italy. More than Germany. Currently, we have a net gain of one person every 13 seconds.
At some point, the market will settle on proper pricing levels. At its peak, only 11 percent of the people in this valley could afford the median home price. In the meantime, during these low, ragged years, a few lessons about urban planning can be picked from the stucco pile.
One is that, at least here in California, the outlying cities themselves encouraged the boom, spurred by the state’s broken tax system. Hemmed in by property tax limitations, cities were compelled to increase revenue by the easiest route: expanding urban boundaries. They let developers plow up walnut groves and vineyards and places that were supposed to be strawberry fields forever to pay for services demanded by new school parents and park users.
Second, look at the cities with stable and recovering home markets. On this coast, San Francisco, Portland, Seattle and San Diego come to mind. All of these cities have fairly strict development codes, trying to hem in their excess sprawl. Developers, many of them, hate these restrictions. They said the coastal cities would eventually price the middle class out, and start to empty.
It hasn’t happened. Just the opposite. The developers’ favorite role models, the laissez faire free-for-alls — Las Vegas, the Phoenix metro area, South Florida, this valley — are the most troubled, the suburban slums.
Come see: this is what happens when money and market, alone, guide the way we live.