Some interesting predictions for 2008 (Denver, Aurora: mortgage, estate, foreclosure)

[jazzlover]

Originally Posted by tfox

I think there's two very distinct categories of exurban sprawl, and I think that this credit contraction combined with our diminishing purchasing power will affect the two types differently.

The first type is "drive-till-you-qualify" sprawl. In metro Denver, this is fairly typical of what we have been seeing thrown up in Weld County. The target home buyers don't have any real desire to live so far out, except that they can't afford anything comparable closer in. Or, they may be so enamored by shiny new construction that they're willing to live halfway to Greeley in order to get it. Either way, the decision to live out there is driven mainly by financial reasons (in hindsight, of course, a very poor decision to make.). This type of sprawl, I think, will be dealt a blow by the recent crisis, temporarily grinding to a halt. In many ways, it's a good thing, as this type of sprawl is pernicious and unsustainable, though you have to feel for the poor people who have lost their homes in the mess, not to mention the others who are struggling to make ends meet as their homes drop further in value.

The second, however, is those who choose to live out there by choice because they want acreage, horses, mountain property, etc. Such people often have the ability to telecommute, are retired, or otherwise don't need to commute daily to jobs. This type of sprawl, I think, is the type of sprawl that Jazzlover dislikes more than the former, as it is more likely in a fragile environment, with a larger resource footprint and more conspicous consumption than the former. Unfortunately, I think that such sprawl is likely to continue despite the current crisis.

I have to agree with much of this, though I think the "drive 'til you qualify" type sprawl, because it is just so extensive is every bit as harmful, if not more so, than what I like to call "recreational sprawl." In the case of the former, you could try to make some justification because people "have to live somewhere," though I think there are far better options that just aren't being opened. In the latter case, though, that is hard to justify people building their McMansions out in the middle of nowhere, with all the attendant damage that causes in fragile areas, just because THEY CAN and they WANT TO. And, whether they can or they want to does not make it either beneficial or right.

Finally, the very economic definition of a recession or depression is a contraction in the economy to "rid it of wretched excesses." That usually is construed to mean reducing or eliminating things like speculative investments, excess liquidity, inefficient economic endeavors, uncollectible debt, and non-productive assets. I would defy anybody to tell me that Colorado's current funny money real estate speculation/development/recreation/sprawl economy is not absolutely rife with all of those things.

[steveco.]

Originally Posted by jazzlover

I have to agree with much of this, though I think the "drive 'til you qualify" type sprawl, because it is just so extensive is every bit as harmful, if not more so, than what I like to call "recreational sprawl." In the case of the former, you could try to make some justification because people "have to live somewhere," though I think there are far better options that just aren't being opened. In the latter case, though, that is hard to justify people building their McMansions out in the middle of nowhere, with all the attendant damage that causes in fragile areas, just because THEY CAN and they WANT TO. And, whether they can or they want to does not make it either beneficial or right.

Finally, the very economic definition of a recession or depression is a contraction in the economy to "rid it of wretched excesses." That usually is construed to mean reducing or eliminating things like speculative investments, excess liquidity, inefficient economic endeavors, uncollectible debt, and non-productive assets. I would defy anybody to tell me that Colorado's current funny money real estate speculation/development/recreation/sprawl economy is not absolutely rife with all of those things.

Can I ask what type of residence you live in?

[Katiana]

I like Sea Level's post and would like to comment on it a bit.

Originally Posted by Sea Level

Jazzlover, you always bring some excellent points to your post and I look forward to reading them. But, I think you see doom and despair coming from all directions. So yes, I have taken the bait. Let’s see if I can paint the other side of the picture.

The end of suburbia? Unlikely, let’s look closer. First off, Americans love sprawl. Don’t underestimate that.

I really don't think this is true. I think Americans love suburban living. I also agree with tfox (I think) who posted about "drive till you qualify". It's not really a love of sprawl, it's a desire to have a little piece of America.

Why will high oil prices kill sprawl? People can’t commute to work – good. Telecommunications has exceeded most home workers speed requirements already and will only get faster. The internet is changing our work model and more people can work from home every day. Let that trend continue, I’d rather work from home than ride a train to the city every day.
Not evey job is a "work from home" operation. I have no desire to see patients in my home. Neither do any of the docs I work for. There will always be people who have to commute to work. However, even now, many people commute a short distance in their suburb or a nearby burb. Before Storage Tek was bought out by whoever it was, a lot of people in Louisville worked there and rode their bikes to work. Now they work just a short distance away in Broomfield. My DH works about 6 miles away in Boulder. Lots of others in Louisville do likewise. Very few actually commute to downtown Denver.

Well then explain the growth of towns before the industrial age? Most of it was due to geography – close to water ways for transport or natural resources to utilize. But it definitely happened. Even Feudal lords loved their land, why – everyone needs some. Even if everyone contracted back into 1 giant metropolis the population growth would require some expansion each year and someone will want that land just a little further out so that it will become more valuable soon.
Good points.

And Colorado has some geography that people want. More telecommunications, more time (hopefully) and more expendable income (maybe) and the more desirable it is to live near some recreational geography that cannot be replicated: e.g. an ocean or a mountain.

There was a massive influx of population to the west at two different times in American history and neither followed energy prices. The first was when Washington sent Wayne to conquer the Indian tribes of the “West” soon after the constitution was signed. The second was in the middle of the 19th century. They both followed two things – Freedom and Economic opportunity. We want our own space. The Pilgrims came here to do just that and we’ve been doing it ever since. It has nothing to do with energy. It requires no more energy to be in Colorado or Nebraska than it does to be in Massachusetts or Georgia.

“Every time in the last 20 years that fuel costs have bumped up above historical inflation-adjusted lows, at least one major US airline has gone bankrupt” And yet the number of airline passengers has increased almost every year since 1980: http://www.euromonitor.com/pdf/imdas_samples.pdf. And all major US carriers, aviation companies and the government predict a 5% growth per year in this industry for the next 20 years. I know, pretty pie in the sky but still it means something. Sooner or later, someone will figure out how to make money on air travel, or they won’t and a new means of transportation eclipse it.

Colorado is not the poster boy for sprawl. NJJ is worse and South Jersey has no one to blame since they are repeating the same mistakes they saw North jersey make decades ago. Florida is worse. Texas is worse. California is way worse. Yes, I have seen these places and statistics will back me up too.

Jazzlover, you are so right when you point out all the environmental issues we face, especially our dependence on oil, foreign or otherwise. It needs to stop and we need to take better care of our planet without a doubt. But people are not going to volunteer to die and the population will always grow (we can have another discussion about why that is the best case for everyone!) so let’s see how that affects us. People will need that clothing, housing, etc. that is so bad for us now. Well we needed that in the past too. So people found a way to get it. So will we.

Water is scarce? No, MFBE is right – there is no shortage of water only a shortage of pipes. Again, regardless of where the population is it needs water. There is only so much but it has to be enough to go around or we start to die. So we make it go around. LA found a way top get water using 1920’s technology. Las Vegas finds a way to get water today. Colorado wastes way too much water – true and that will need to change but I am quite sure that we can find a means of getting what we need to survive. How will we get it here? I don’t know but see the above paragraph.

[jazzlover]

Originally Posted by steveco.

Can I ask what type of residence you live in?

Currently, in a modest SFR in a walkable neighborhood in a small town. I gave up the suburban/exurban lifestyle for the very reasons I have posted here. Unfortunately, sprawl is still sprawling all around me--at least I don't have my money tied up in it . . .

[jazzlover]

To all who think that suburbia will continue to expand into the foreseeable future because it is what people want, I will pose one question. I had this question posed to me way back in college in a urban/rural planning course by a professor who had spent years as a planner. The question he posed to the class about the desirablility of suburbia has stuck with me ever since:

What would you think about living in suburbia if you were limited to 5 gallons of gasoline per family per week?

I had just lived through the summer of 1973 in Denver, when it was virtually impossible to buy fuel anywhere in the metro area after 9 o'clock in the morning, and fuel purchases were limited to $3.00 (about 6 or 7 gallons then). (There are probably few people on this forum who were around Denver during that summer of chronic fuel shortages, but I can tell you that it was no fun.) That fuel shortage was caused by price controls and inane government allocations, and didn't last but for a few months. When fuel shortages become "structural"--that is, caused by excess demand chasing shrinking supplies that are in permanent decline, things will be much uglier. Some people I know who have spent their careers in the oil industry tell me that they have no idea how they are going to meet future demands for fuel--there just isn't enough economically producible petroleum left to do it.

I will add one more quote from Kunstler's blog:

Matt Simmons, the leading investment banker to the oil industry, predicted at a major conference in October that the US is much closer to encountering a problem with chronic spot shortages of oil (and gasoline, of course) than the public realizes, and Simmons says that this supply problem will be extremely disruptive in every imaginable way -- economically, politically, and socially. Most of the commentators I take seriously see the price of oil oscillating in 2008 between $80 and $160-a-barrel. Simmons says Americans will keep sucking up the price increases, but they will probably freak out over spot shortages.

For some more reading, this presentation by Matt Simmons, who Kunstler quoted above, is pretty darned sobering:

http://www.simmonsco-intl.com/files/...%20Conf-BW.pdf

[Katiana]

What would you think about living in suburbia if you were limited to 5 gallons of gasoline per family per week?

DH and I could probably do it. I drive a grand total of 9 miles per day, round trip to my job. I do not leave for lunch. DH drives 12 miles, could take the bus. He walks to Wendy's at lunch many days (no caf in his building, could of course, take a lunch). I am probably driving less than I did in my pre-employment days, when I ran a lot of errands and ferried kids around town to various activities.

The suburbs have changed a lot since 1973. There was no hospital in Louisville then (where I work), few stores other than a grocery. Now that the population has grown to support retail, we don't have to drive to Boulder or Broomfield for much. There was little "telecommuting", b/c there were no PCs!

My DD lives near DU and attends school at the Health Science Center. They have just moved to Aurora, which she says will be a 20 min. drive for her. Even when the HSC was in E. Denver, she drove at least as much as me to get to her "work". Living in the city is no guarantee that you do not drive a lot.

[Sea Level]

To all who think that suburbia will continue to expand into the foreseeable future because it is what people want, I will pose one question. “What would you think about living in suburbia if you were limited to 5 gallons of gasoline per family per week?”

I would probably hate it.

Reverse that, what would you think about living in the city if your were limited to 5 gallons of gasoline a week?

How would food be brought in to you? They sure don’t grow it in the city. How would all the other goods be brought to you? They sure aren’t making all of that stuff in the city.

How would you like to live in the city while limited to 20 kilowatt hours of electricity per week?

You probably don’t have a fireplace for warmth or a barbecue to cook on. How will you find your way along the dark streets? Too many candles lead to fire – always the bane of cities before electricity.

This is one big world and we all live in it. Each place has advantages and disadvantages but just like a global economy, we are all tied together. Take something away and people in certain places will be better off than others but maybe not the ones we think and maybe not in the ways we think. People want to survive and, so far, they always have.

And for the record, I don’t like suburbia. I live in a small “urban village” where I walk to Doctor’s and restaurants and shops. I can walk to the train station and be in Philadelphia in 15 minutes.

[CosmicWizard]

My wife and I could probably make it on 5 gals per week, but it would be tight and limited to driving to and from work for both of us and one trip for groceries. In a crunch I could get a bike and bike the 16 mile round trip to and from work, though the city streets of Grand Junction are not truly bike friendly corridors. My wifes round trip is less than half of mine and she drives a more fuel efficient car ( VW Golf ). It would be a shock initially, but I'm certain that we could adjust.

blessings...Franco

[Katiana]

I live in a suburb that could be more described as a small town. Everything I really need, including some entertainment, is within a four mile drive, with some things much closer. It is walkable, if you want to do it.

[hello-world]

Originally Posted by jazzlover

That ignores the fact that petroleum is a component in just about ever thing the typical American eats, wears, lives in, or drinks. The effects of increasing energy costs are really just starting to permeate the rest of the US economy--food costs, freight costs, plastic costs, etc., etc. If all I had to worry about was the increase in price to fill up the jalopy at the gas pump, fuel could be $10/gal. and I could still survive financially. But, factor in the fuel cost into everything else the typical American consumes, and the picture becomes far more bleak.

People obsess over the price of gasoline, but what they should really be following is the price of diesel fuel (actually, "medium distillates," which includes diesel fuel and jet fuel). That is what our freight transportation system runs on--trucks, trains, barges, jet airplanes, etc. Right now, diesel fuel is as high as 60 cents per gallon more than regular gasoline in some Colorado locations. As I quoted one of my oil industry acquaintances a few months ago as saying, "People drive on gasoline, but the economy runs on diesel fuel." When (not if) diesel surpasses something around $4.00-$4.50 per gallon (around $3.60-$4.10 +/- without fuel tax), I think you will see some very serious general price inflation and a general economy going deep into recession. I also think that would send what's left of the increasingly financially strapped airline industry into the tank. So much, then, for cheap air travel. By the way, nobody has figured out how to run a jet engine on corn cobs, wood chips, natural gas, nuclear fission, or solar power.

oh but there's CORN. "ethanol! ETHanol! ETHANOL!" should be interesting to see how THAT ubiquitous ingredient (corn and soy: in every aisle of the grocery store, in some of the building materials, in some of the fuel tanks for transport, etc.) and limited resource influences some of this. and vice versa. does it seem like the threads of the seams might be stretching a bit all around lately?