Florida's Foreclosure Disaster - A Message For Us

Just finished reading this story from the New Yorker Magazine. Then went onto Windows Live Maps and traced the latest aerial photos of State Road 54 in the Tampa area. The two-dimensional aerials are really telling, illustrating numerous empty subdivisions. Land stripped, roads put into place, some construction completed. Just totally amazing.

Pictured above is one area adjacent to State Road 54 which illustrates a new subdivision (center on the picture), an unfinished subdivision (to the left of the new subdivision) and an unfinished commercial plaza (on the right edge).

While we may not have had the rampant speculation and flipping of properties that is reported in the article, some areas of Massachusetts have experienced a rapid run-up of property values as the second home market brought in piles of outside cash to the housing market.

Then, as I thought more about it, there is some level of housing speculation involved with pursuing Chapter 40B developments over traditional land development. Albeit these projects have certain limits, there is clearly a profit to be made or those in the business would not be seeking approval of these developments.

Why do I believe that Chapter 40B projects fall into the land speculation side of the equation? Well basically, a traditional subdivision can be laid out, and then delayed until market conditions will support building the housing. Or, the housing can be custom built for particular buyers. Not a lot of risk, except perhaps for the value of putting in the infrastructure. A Chapter 40B project on the other hand is issued by way of a "comprehensive permit." These permits generally have strings attached, by the community - say it must be used within a particular time period - or the funding agency - which requires the funds be drawn down within a particular fiscal year. Either of these force construction to advance even if the market cannot support the amount of housing being proposed. Below is a one such development. To activate the permit, the road has been put in and land clearing begun.

This site is less dramatic than many others that are out there. I read regularly the postings to the egroup Reform40B. This group lists many half built projects that have stalled across the state. These projects do not provide the promised housing, either for those needing affordable homes, of for the general labor market.

These shortcomings illustrate the problems with supply-side considerations when thinking about the relationship between housing and the economy in general. It argues that the state housing programs need to be re-thought. We need more focused housing programs, not as many projects spread haphazardly through-out the state to meet the 10% rule in every community, but to ensure that regions are meeting their true needs, this includes protection of open space and focusing jobs and housing in areas served with appropriate infrastructure. While 2 acre lot sizes are not justified across the board, I firmly believe that certain areas should be pushed to open space protection zoning and agricultural protection zoning with lot sizes that are appropriate to ensure that the state does not lose its farms and open areas to ill-thought-out housing programs.

As a closing thought in this post, is it appropriate to build affordable housing in an area not served by public transit, then increase the gasoline tax to a level that is harmful to these people who must live in this remotely located affordable housing? Is our tax policy consistent with our housing policy? Or are we making it necessary for the working poor to support the transportation services made available to the high end jobs located in downtown Boston?