Focusing on the foreclosures shows only part of the sub-prime fiasco’s effect on our country. Yes, we’ll have displaced people, a swelling poverty base, and an overall loss of consumer wealth. It will impact our businesses, manufacturing sectors and economic stability. Rising food and gas costs (along with housing costs) make up the bulk of a consumer’s static monthly expenses. As the burden weighs in, some people are forced out of their homes, and others are selling rather than stay and die of the slow pinch, regardless of the type of mortgage they have.

We’re about to witness the death of urban sprawl.

(David) Stiff says home buyers’ attitudes have changed. The old rule was, “Drive ’til you qualify” - meaning they should go out from the city until they could get what they wanted at a price they could afford. - NPR

What’s happening now is completely different. Homes closer to cities with short commutes to jobs are selling well with tons of buyers and their home prices up 10% or more in some areas. The farther the home is from the city and the jobs it holds, the greater the plummet in prices.

Realtor Danilo Bogdanovic surveyed two rows of neat, new, brick townhouses on Falkner’s Lane. “These were selling for about $550,000 at the peak, which was about August ‘05, and they’re selling right now for about $350,000,” Bogdanovic said. “Fifty percent of this community has been ether foreclosed on or is facing foreclosure.”

For residents who work in the city, their commute is around an hour on trouble-free days. But that can extend upward toward two hours. - NPR

I hate to be cynical here, but the so called “white flight” is coming home to roost. The majority of homeowners who fled the city to the outlying areas are about to take a big spank on the bottom line.

Of course, other scenarios may unfold in conjunction with the suburban exodus. Businesses could begin relocating to outlying areas to tap cheap prices and available labor. We might see a rise in crime in suburbs as the money base shifts back to the city, further lowering the value of suburban homes. Hopefully we’ll there will be a better blending of nationalities as cities repopulate with the influx of residents.

I hope that city managers throughout the county see this for the opportunity it is, and work to improve their offerings to the suburbanites headed back into their fold. That means safe, affordable housing for the displaced as well as for those who are still able to buy, and the infrastructure to move them around quickly. Provide universally good, plentiful schools, adequate parks and enough grocers to keep the gouging at bay. Deploy an evenly distributed police presence. Make your cities rock, and you won’t lose this tax base in 20 years when they can afford to leave.

Learning from your mistakes is the key to success, and a potential silver lining to the ruination of so many American dreams.

Crossposted at Bring It On!

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