OK, I know the title probably has you doubting me already, but hear me out. First, believe me that I feel very deeply for those who are going through tough economic times. There are some out there who simply were way too optimistic about their mortgage and their homes, or didn't care that they had this interest rate that could go to the moon. There are others, though, who did everything right, but due to circumstances around them beyond their control, were swept into this financial hurricane.
With that disclaimer out of the way, let's look at this from a broader perspective. Where have the housing markets been hit hardest by price drops and foreclosures? We can generalize and say that this is California, Arizona, Nevada (Las Vegas in particular), and Florida. Other areas have been hit as well, but these are probably the worst. Next question: Where have we seen the most rampant, unchecked suburban sprawl? Those same states, right?
So, what's my point? Well, now that the housing crisis is in full swing, builders aren't sprawling right now. And in my book, that's a good thing. In a perfect world, this building hiatus would be the opportunity for developers to shift their focus toward higher-density and infill development, rather than spreading out. It would also be a good time for municipalities to rethink their development trends and discourage greenfield development.
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No! Foreclosures are not good; however, they are painfully inevitable for the foreseeable future. The cause? Without trying to oversimplify things, I think the troubled lenders and borrowers compromised themselves by loosening standards too much. People also lost sight of the historic returns on real estate (6% appx. since 1968 and 3% since 1890.)
You make the point that the four regions that have had the worst price drops also have the greatest sprawl. The conclusion is made that it is a good thing that builders aren't building and thereby "sprawling."
Don't get me wrong-I'm no fan of sprawl. On a drive today along highway 70 near Sacramento, CA, I was amazed at the sea of houses known as "Plumas Lake." This development may well be the epitome of suburban sprawl.
I agree that it is a good thing that builders have slowed their construction, but only because we need to weed through the excess inventory. This step is necessary to return to a healthy market.
I think this housing crisis is only going to hurt the move to urban style housing. The drop in the price of single family homes is going to make it less cost effective to build these projects. With cheap home prices, first time buyers will be more apt to pass up the high density housing in favor of single family homes.
I think that many of the high density projects in the area came from the boom in real estate. It was only a few years ago that these projects were almost unheard of. I fear that builders and buyers are going to move away from this type of housing with the downturn.
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