Best of 2011: Sick suburbs, expiring exurbs

Suburban tract housing outside Cincinnati, near Union, Kentucky Credit: Derek Jensen/Wikimedia Commons

Editor’s Note: In the run-up to the new year, Crosscut is sharing ten days of its best stories from 2011, each with a different theme. Today we are looking at some of our coverage of the Puget Sound region’s changing suburbs. This story first appeared in August.

Flash back to 2006. The economy was booming, the stock market soaring to unprecedented heights.  Here in Puget Sound, more than 20 high rises containing thousands of dwellings were proposed on almost every vacant or under-used lot in downtown Seattle. Carpetbaggers from California to New York and Las Vegas were trotting out overblown tower schemes obviously imported from elsewhere.

Up in Snohomish County, a far more insidious and damaging series of events was unfolding. Dozens of developers — from bonafide to bottom-feeders — were beating down the doors of the county administration building to demand more and faster permits to clear the landscape and build single family houses. It was a home buying mania.

Real estate agent Kyoko Matsumoto Wright recalls those heady days. “We often had multiple offers on anything that was remotely livable. While most people knew what they could afford, clearly some would look at houses much more expensive. But their banks would give them the OK to buy the most expensive one.”

Nothing the matter with building and selling, buying and moving into one’s dream, right? Trouble is, as we now know, millions of Americans had no business trying to buy a house. For many households, it was little more than an illusion, fueled by irresponsibly loose lending practices and an attitude that “investing” in real estate was a sure bet — with increases in value forever.

“During the housing bubble, Snohomish County allowed a large number of rural subdivisions,” said Tim Trohimovich Co-Director of Planning & Law for Futurewise. “These subdivisions had high costs for the families that bought the lots, the nearby farms and forests, and the environment. It is unfortunate, but not surprising, that these high costs have led to a high level of foreclosures,” he said.

The eager builders managed to persuade Snohomish County to adopt laws that allowed wholesale removal of trees, clearing of land, and rapid approvals. Standard development practices that had been used to good effect in other Western Washington cities for years were rebuffed. Since then, county standards have been beefed up, but too late to head off the most recent wave of havoc on the landscape.

One code was cleverly disguised to sound noble, but in fact drove a stake through growth management principles. Under the law, hundreds of “Rural Cluster Subdivisions” (an absurd oxymoron of land use terminology) were approved. They are still on plat maps, awaiting, one hopes, legal extinction. Thankfully, most were not built, and many of the proponents are now bankrupt and gone.

There was some benefit to the Great Recession in that it cleaned house a bit. But the detritus of half-built projects, shoddy construction, and disconnected pockets of randomly-located microsuburbia carried with it a price. Snohomish County is now the reigning queen of short sales and foreclosures in the metropolitan area, by a good measure. Throughout the county, fully 38 percent of active housing transactions fall into these two categories, according to data from the Northwest Multiple Listing Service. Some areas are as high as 42 percent.

The percentage for Pierce County is 32 percent; in King County, the number is 27 percent — nothing to be proud of, for sure. 

Look closer and a very interesting pattern emerges. Many of the communities and neighborhoods closest in to the center of the Seattle metropolitan area — areas with significantly higher densities and older housing stock — actually performed reasonably well during the recession. Value was lost, certainly, and some loans are under water, but there is virtually none of the wildly oversold and overpriced housing found in the outer suburbs and exurbs. A similar pattern is found near other urban centers such as Bellevue and Kirkland.

One long-standing observer of the American development industry, Christopher Leinberger, wrote a provocative piece in the Atlantic last year entitled “The Next Slum,” about the end of suburbs as we know them. Leinberger predicted that in the coming decades there will be fewer and fewer buyers wanting the American dream so popular over the past 50 years. Most younger people are instead preferring cities or close-in suburbs for their higher paying jobs, choices in culture, and a more diverse social setting — often within walking distance.

There are, of course, those who dismiss this theory based on the notion that as soon as young people reach childbearing age, they will opt for a big house and big yard. But as the 2010 Census has already revealed, household size is at an all-time low. Younger people are delaying marriage now five years longer than when they typically would marry a decade ago. That is a massive change of preferences and behavior in a short period of time.

As many demographers have pointed out, in 20 years, there simply won’t be the sheer numbers of people around to buy all those free-standing houses in arcadia. Prophetically enough, ten years ago, even The Wall Street Journal crunched the numbers and concluded that buying a house the hinterlands was a very poor investment choice. And that was before the recession. 

In recent years, the Center for Neighborhood Technology in Chicago has been tracking foreclosures in a number of urban areas. They found a common pattern, even more sharply defined than the one here: most foreclosures have occurred around the edges, while home ownership near the center has been stable by comparison — even if the values are somewhat diminished. Moreover, organizations such as the National Resources Defense Council have found that there is a direct correlation between high car ownership and foreclosures. The old saw about “Drive till you qualify” has been turned rather cruelly on its head. Turns out some people should have never gotten behind the wheel to begin with.

These patterns are vividly confirmed in the Chicago area, where outlying projects, complete with new high schools, have been stopped in their tracks by the recession, the rise in gas prices, and the fact that so many of these remote projects were highly speculative. “Places that were verging on becoming part of the Chicago area,” a real estate analyst says, “have reverted to rural status and are likely to stay that way for at least another generation.”

But here’s the fascinating morality tale. Those counties and cities and towns that most heeded the tenets of growth management have fared the best in this worst of times. They are emerging with the strongest downtowns, the most stable housing, the best values, and the highest “quality of life” that everyone seems to seek as the holy grail.

The suburb might not be dead yet. But it’s very ill indeed.

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