Forbes.com reports on "America's Hardest-Hit Foreclosure Spots." Detroit's Wayne County tops the list, followed by Las Vegas's Clark County. No county from New England places in the worst 50, though parts of New York are there.
Writing for the Atlantic, Matthew Yglesias points out that the subprime mortgage crisis is beginning to affect people who have the misfortune to live near people who made unfortunate decisions:
...the crisis is harming the neighbors of people in
foreclosure, even those who aren’t having trouble making loan payments.
According to one academic study, every foreclosure reduces the value of
all other houses within an eighth of a mile by about 1 percent, as the
sight of vacant property scares off potential buyers. Combine that with
a market already in decline, and neighborhoods that begin to have
troubles can go off the cliff. On the street pictured [see link], three houses not
in foreclosure have been languishing on the market for 72, 97, and 149
days; asking prices along the cul-de-sac vary widely, but average about
$40,000 less than the comparable prices in the first two quarters of
This phenomenon seems to be strongest in fast-growing, middle-class areas with new housing, such as parts of Florida and Nevada. Yglesias includes a map of the hotspots, along with a map of one hard-hit street in Three Lakes, Florida.
Last week the New York Times reported on the 215 luxury condos going up next to a Natick mall, on the site of an old Wonder Bread factory:
Applying the lifestyle-center model, where upscale retailers, sit-down restaurants, and condos are built around what looks like a city street, General Growth Properties has embarked on a $370 million Natick Mall expansion and makeover.
CommonWealth magazine first reported on the project in 2006, when correspondent Noah Schaeffer noted that the fear of the state's Chapter 40B "anti-snob" law helped get the General Growth project approved. For the complete back story (we don't expect the Times to get into the details of Chapter 40B), read "Playing It Smart."
Housing has become scarcer in the dark-colored states on the above map, with new residents moving in (or being born) faster than contractors can put up houses. (Click the map for a larger image, and download this file for complete data: Download housing_estimates_by_state_2006.xls) The most extreme case is Alaska, which has grown by 42,520 people since 2000 but has only 15,182 more houses and apartments to accommodate them. Things are getting almost as tight in California, which has 2.4 million more people but only 900,000 new houses. And Connecticut has had slow population growth (only 92,270, or 2.7 percent more people since 2000), but it still hasn't added half as many units to its housing supply. Will a shortage lead to higher home prices there?
In 11 states with sluggish population growth -- including Massachusetts, Michigan, and Pennsylvania -- the creation of new housing units has outstripped the creation of new residents. (North Dakota created 18,000 new homes even though it suffered a net loss of 5,000 people, and Louisiana is the only state to lose both homes and people.) Will there be a housing glut, and lower prices, in these states? Maybe, but if they can attract new employers who need new workers, those "extra" houses could suddenly become essential.
An environmentally conscious person might wonder why one new home for every two people isn't good enough for economic development. But the average household size in America is getting smaller and smaller (down to 2.7 people at last count), thanks to our habits of marrying earlier, having fewer children, and refusing to die at the same time as our spouses.