An ominous map

Look at a nationwide map of foreclosures, and you just might be looking at a hollowed-out future of exurban America.

I alluded to this phenomenon a couple of days ago in musing over Sen. Obama's ill-considered remarks that implied giving the developing world effective veto power over American driving and dietary habits.  The fact is that ever-rising energy costs will alter American driving and dietary habits with no government intervention at all.  $7 gasoline (or $12, now that Robert Hirsch of Hirsch Report fame has repeated Charlie Maxwell's $12 forecast on CNBC) will make the 40-mile one-way commute unsustainable.  And to some degree, we already see this reflected on a nationwide map of foreclosures, county-by-county, as put out by RealtyTrac.

In the places where foreclosures are highest, writes Wall Street Journal columnist Holman Jenkins (yes, I know I excoriated him a few weeks ago, but this most recent column isn't half-bad)…

…Many of these homebuyers are underwater not just
because they bought more house than their incomes could support, and
not just because prices are falling. They were also betting on commute
patterns and demographic expectations that are proving invalid.

These were bets on location, location, location –
premised on the idea that people would be willing to live hours from
anywhere for a chance to own a single-family home they could actually
afford. No federally sponsored haircut can put these housing bets back
in the money, or stop these houses from coming back on the market at
distress prices.

And the reason for that, although Jenkins doesn't say so, is that rising fuel costs are making the exurban lifestyle increasingly unsustainable.

So let's examine the map as Jenkins did.  The worst of the bleeding is in an arc reaching from Sacramento to Vegas to Phoenix, plus a goodly chunk of South and Southwest Florida, plus the tier of counties just east of I-25 in Colorado. 

Now Florida's a peculiar case; so much of the malinvestment there went into second/vacation homes.  But that big Western arc sure looks like an unconscious bet that car culture would last forever.  And it's especially true of those Colorado counties — cheap land on the plains east of the Front Range, where housing was more affordable than in Denver or Aurora or even Fort Collins.  It was a wonderful thing — as long as gas stayed under $2.50 a gallon.

Looking at the lighter shade of bleeding reveals more problem exurban areas — like the region 40-50 miles southwest of Chicago, including Kendall County, home to 77% population growth between 2000 and 2007, highest in the nation.  Much of the state of Ohio is in the pink as well, including the I-71 corridor where new arrivals made long-distance commutes to Cincinnati and Columbus de rigeur during this decade.  The parts of Florida that aren't in the red are mostly in the pink, including the I-4 corridor that would likewise be unsustainable without cheap gas.  (Can't afford Tampa or Orlando?  Move to Lakeland or Winter Haven and commute.  Seemed like a good idea at the time…)

I don't necessarily buy into all of James Howard Kunstler's near-apocalyptic predictions about what's in store during the Peak Oil era.  But the map tells one part of the story that's undoubtedly true: there's a whole lot of fairly new housing stock out there, 40 or 50 miles from major cities, that's being steadily abandoned… and may never be occupied again.

The Daily Reckoning