Inquiring minds are reading the LATimes this morning about the effects of the housing bust on cities:
Although the causes of the decline in these metropolitan areas are distinct from the loss of employment from shrinking manufacturing and industry in some of the nation’s old industrial powerhouses, these areas could experience fates similar to places such as Cleveland and Detroit, with neighborhoods experiencing high rates of vacancies for a very long time, according to a study to be released Thursday.
“Some neighborhoods are going to suffer tremendously or are never going to come back or come back very, very slowly,” said James R. Follain, senior fellow at the Rockefeller Institute of Government and author of the study published by the Research Institute for Housing America, a division of the Mortgage Bankers Assn.
Wow, stop the presses with that last statement. Somebody actually is stating that after life throws a curveball things don’t come back exactly as they were? To be able to make that statement you have to be a senior fellow and not just a normal, run-of-the-mill fellow.
As is usually the case, liberals go way too far in describing the crisis in their quest to sound important:
A traditional city in decline is one that has suffered a sustained population drop, leaving behind empty houses, apartment buildings, offices and storefronts. Cleveland and Detroit, for instance, suffered from the erosion of manufacturing and the loss of residents, who left in search of jobs.
Instead of eroding a particular industry, however, the housing bust left a glut of homes because of overbuilding and the foreclosure crisis. Follain argues that the future of these cities is threatened in similar ways to that of Rust Belt cities.
“Long-vacant neighborhoods are going to develop, and we can imagine what can happen,” he said, including potentially higher crime and lower property taxes.
Some of the cities being picked not to recover are some of the brighest stars through the go-go years just after Y2K:
Potential candidates for long-term decline named by the study are the areas hit hardest by the drop in home prices in recent years. They include several inland California metropolitan areas that grew rapidly during the boom, including Stockton, Modesto, Fresno, Riverside and San Bernardino. Las Vegas and Miami also made the list.
Historically, when a city declines there is usually a major shift in the eoconmy, for example, the mid-west in the late 70’s and early 80’s. Entire industries were no longer needed or shrank drastically in size and importance.
Today, the job losses are not like that. It just got too expensive to live…people overstretched, maybe lost their job, and many have moved away. The part of the story that ‘they’ aren’t telling is that this cycle has been happening for the last 120+ years in Southern California and there is nothing ‘different’ in this cycle except that the housing downturn is more severe. In other words, California will rise again!
Many of the municipalities listed above are in growth corridors. Those will be the same corridors when California fixes its problems and people start returning.
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