Back in the early 1980s my family used to take weekend drives out to the Inland Empire from Orange County to look at housing. At the time it seemed that was the only thing they could ever afford to buy, although my parents balked at the long drive into OC along the 91 and we stayed in Tustin for good.
One of the places we used to visit was a bunch of empty fields dubbed “Rancho California” – which is now part of the city of Murrieta. Populated primarily by families like mine, folks priced out of OC and San Diego, who believed that the California Dream forced them to move inland to buy a home amid urban sprawl and commute for an hour or two (if not more) to their jobs in the coastal economic core. They brought conservative politics with them, reinforced in the SoCal exurbs where it seemed that low taxes and sprawl really were producing prosperity, where the government’s central presence in making it all possible was hidden or ignored.
And now it is collapsing. As the LA Times describes in an article on Monday rampant foreclosures, mass layoffs, and the almost complete lack of a safety net have overwhelmed the private sector to produce a catastrophe:
At this point in life, Linda Juarez expected to have five years of equity in her house, a secure future for her family and a viable stake in the American dream.
But that’s not how the story has played out. Her home’s value has withered, her husband was laid off and rehired for less pay and grand dreams have given way to more modest expectations….
Here in southwest Riverside County, where foreclosures and unemployment have taken an enormous toll, one of the biggest casualties has been the middle class, which is rapidly becoming the new poor.
“This is more of a middle-class recession than any before because of the housing component and because the shutdown of the financial system has spread into the service and construction sector where you have a lot of the better jobs,” said John Husing of Economics & Politics Inc., a regional economic research firm. “Recessions usually fall on those at the bottom, but now all tiers of society are being hurt.”
The article suggests that sales of foreclosed homes may be providing some easing of the pain – but in a must-read article from the Irvine Housing Blog, it’s clear that the sales are from “cashflow investors” – absentee landlords looking to rent the property, and that it’s not likely to be enough to arrest the downward spiral:
The third level inland [Moreno Valley, Perris, Murietta] is a high-risk market. There is little economic activity out there because it is dependent upon real estate. Market conditions will get worse here, and coditions will stay bad for quite some time. There are cheap houses here too. This one is $45/SF. However, based on current pricing across the area, this is the market slice I find least attractive. IMO, prices not low enough to compensate investors for the risk. I foresee continued downward pressure on prices across this entire market swath.
Irvine Housing Blog foresees an eventual recovery as the market bottoms, but that doesn’t take into account the human toll of the crash – widespread unemployment and families barely getting by, hoping that the food bank has enough to keep their children fed.
Zed Hollingsworth, the new State Senate Republican leader, represents Murietta in Sacramento. His coup against Dave Cogdill was predicated on the notion that new taxes were verboten and that California needs to cut spending instead to balance the budget.
His constituents are paying the price for this lunatic extremism. If Hollingsworth were to have his way they would have no government food assistance, no unemployment insurance, no foreclosure protection or assistance, and no health care assistance. He and his fellow members of the Zombie Death Cult have already stripped local governments of funds to provide jobs and education. Public safety cuts may be next.
But it’s not just a failure of conservative budgeting policy at work in Murrieta. It and cities like it are experiencing the collapse of 20th century California. The notion that a sprawlconomy can provide economic security was at the core of California over the last 50 to 60 years. Murrieta was a logical outcome of the process. And it will probably remain an economically distressed place unless we reorient the basis of prosperity in California away from sprawl, away from housing markets, and toward something more lasting, that can keep families well-fed, in decent homes, and living fulfilled lives.
Somehow I don’t expect Zed Hollingsworth to be interested in any of that.
Maybe somebody needs to tell Zed Hollingsworth that there are many, many of his constituents who wish they were paying taxes, but with effective unemployment (U-6) at 20% in the Inland Empire, they aren’t paying any income tax.
It will be sad to see what happens to some of these exurbs that had huge construction in 2002-2008 as the house prices were inflating unsustainably. So much of their economy was based on infrastructure, construction, marketing, financing, insuring, furnishing, and maintaining these new homes.
The incomes and jobs in the sprawlconomy sectors supported the quickie marts, grocery stores, restaurants, retail, and service establishments so the entire local economy is rapidly falling apart.
Now the residents are going to try to find jobs commuting to San Diego, or Orange County, where the local job market is being devastated by the collapse of the finance/mortgage/real estate sector and the contraction of a general economy where 10% or more of consumption came from mortgage equity withdrawal.
There’s a belief that there will be some recovery based on some magical reversion to the mean, but where will the jobs come from?
Some of California exurbia won’t recover.
It’s vitally important that our leadership plans ahead for the defeat of the initiatives on the May 19 ballot. What
does that entail?
1. Qualifying the majority rule amendments (budget/taxes).
These will be necessary for a special election the fall. Because…
2. The Democrats will go to the majority rule fee increases when May 19 fails. This will result in a Republican refusal to vote for the budget (_any_ budget) because it will be “illegal”. Hence, come September/October, we’ll have no budget (even though we have the money through the majority rule fee increase). This is the time to pass at least the majority rule initiative on the budget.
3. Timing is everything in politics (look at Obama’s victory–this never would have happened except for the Republican/economic collapse, given the racial animosity in this country). Our legislative leadership seems incapable of planning more than several months in advance. It is insane to create a Colorado-type spending limit when the whole country is turning to New Deal type programs. Leadership! Do NOT throw away this OPPORTUNITY!