Why the housing crisis will be worse “out there”

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There is a lively debate on this blog and elsewhere about whether the foreclosure crisis will make its way from the hardest hit areas — the Palmdales and Lancasters — into the center of Los Angeles. My suspicion is that the eye of the housing storm won’t move much. Yes, the economic weather will worsen all over L.A., foreclosures will rise. But the most severe economic damage will take place in newer, recently built, far-flung communities that have already been hammered. And not just because of the bursting of the housing bubble.

Consider the effect of $4 gas. A 110-mile round-trip commute gets very expensive in a hurry. Consider that fast-growing areas such as the Inland Empire have suddenly lost a major source of economic vitality: home-building all the economic activity it creates and sustains.

But consider something bigger: the possibility that Americans are slowly deciding they don’t want to live in far-flung suburbs and exurbs any more. This is the central argument of an essay by Christopher Leinberger in last month’s Atlantic magazine titled ‘The Next Slum?’ The next slums, Leinberger asserts, will take shape in soon-to-be neglected suburban cul-de-sacs: ‘ ... many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s — slums characterized by poverty, crime, and decay.’

Why? Leinberger sees a growing preference for ‘walkable’ neighborhoods closer to urban centers, and closer to mass transit. He sees a glut of large-lot houses — he quotes one academic who sees ‘a likely surplus of 22 million large-lot homes.’

Then what? Collapsing prices, and a decline in home ownership in wounded suburbs: ‘ ... the fate of many single-family homes on the metropolitan fringes will be resale, at rock-bottom prices, to lower-income families — and in all likelihood, eventual conversion to apartments.’

A caveat: This theory doesn’t fit neatly in Los Angeles, where urban poverty has already spread its way into what were once middle-class suburbs. But it’s still worth considering.

Don’t get me wrong. I’m not predicting the housing troubles and foreclosures won’t spread into more affluent, centrally located neighborhoods. But the damage there will not approach what is already happening ‘on the metropolitan fringes.’

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: ‘Degrading images’ in Palmdale, submitted to Your Scene at latimes.com by Frank.