[NYTr] Booming Economy: Housing Market Crashes and Burns

[All the News That Doesn't Fit]

Counterpunch - Sep 27, 2007
http://www.counterpunch.org/farago09272007.html

Housing Market Crashes and Burns

What Congress Won't Hear from Wall Street

By ALAN FARAGO

Why did the bank thief in Homestead, Florida think he could get away
with using a stolen backhoe "to lift and haul away a drive-through ATM
from a Bank of America early Tuesday"?

Because that's pretty much how it works in Homestead, where political
cronies run a once-rural now sprawl ridden community like their own ATM.

Homestead abuts two national parks that define the Everglades. The
transformation of Homestead, in defiance of economic opportunites that
might have been embraced by a gateway community to national parks,
happened at a blazing pace during the building boom.

Its political and economic elite did not only look away from the
environment, it demonized civic activists and those who disagreed with
the primacy of bulldozers, graders, and drag lines.

For decades, Homestead businessmen enviously watched their neighbors to
the north cash in on the opportunities of sunshine, tourism, and warm
winter beaches, chafing for their moment to cash in.

Most Florida communities have been throwing up road blocks to Walmarts,
in a desperate effort to preserve character of place. But in
Homestead-the last vestige of Florida's agricultural past in southeast
Florida and in the state's largest county-it's all for sale, all the
time.

With the bulging tourism economy of the Keys to the south, Homestead
potato and tomato farmers and bankers (whose loans to land owners were
tied to the speculative value of farmland) felt like fishermen at a
weir in the stream, just waiting for population growth to push enough
people down the Florida Turnpike to tip the scales from the quiet
sleepy life to strip malls, multiplexes, auto dealerships, speedways,
trains, road widening, highway interchanges, and airports.

In the mid-1990's, after a devastating hurricane, with open arms the
Homestead cronies intended to welcome the privatization of a military
base (Homestead AFB) but got all tangled up in violations of the law
and environmental barriers.

This is one of the more interesting phenomenon, that manifested in
places like Homestead and other special places in America bordered by
fragile natural resources.

Today, the landscapes that needed to be protected were vacuumed up by
an industry that leaves a footprint as permanent as concrete building
pads.

Now that production home builders are slashing prices by as much as 50
percent just to push back against the worst entropy in housing markets
in recent history, a question arises: throughout the housing boom,
environmentalists and civic activists were challenged to be even half
right about their claims to protection of law, clean air, water,
fisheries and protections for public space.

The environment and the economy was painted to be just such a balance:
fifty / fifty, half and half.

So now that publicly traded production homebuilders, many of whom were
active in Homestead and Miami, are trading down to book value, and may
have to fall 50 percent more just to settle at the point they were in
the housing recession of the early 1990's, it turns out that civic
activists were 100 percent right: that tract housing planted in
farmland, far from places of work, is not just an eyesore, doesn't just
threaten water to aquifers and the bay, it's not even close to being
economic.

So why aren't all those Homestead political cronies who trashed the
public interest instead of giving it a fair hearing when it might have
mattered in places held to at least as high a standard as the ATM thief
will be held when he is caught?

This is more than a point dredged from memories of an aggrieved past.

Today, Congress is entertaining recommendations to reform the financial
practices that lead to the problem in the first place-but so far as the
press has reported, Congress is heading off in the wrong direction.

The problem is not lending practices or more careful regulation of
mortgage backed securities that now lack adequate review by
once-trusted rating agencies like Standard and Poor's and Moody's.

The problem is on the ground in places like Homestead (Agrestic,
anyone?) and other sprawl ridden communities in America. That is where
Congress needs to look: how to stop tract housing that has proven to be
economic only when fraud, deception, and trashing of the public
interest outweigh legitimate cost factors, including for instance the
value of national parks, of clean and reliable supplies of drinking
water--all of which belong in the costing models but are left out, in
perverse irony to the phantom derivatives multiplied by Wall Street ten
or twenty times the value of mortgages on the ground that turn out to
be, well, not worth very much.

Today, the bankers and developers who were all over Homestead farmland
like vultures on a dead python for zoning and building permits (and
contributed their share of liar loan mortgages that triggered a world
credit crisis) are in hiding.

(Practically speaking, what that means is that they are on the phone
with their Senators and Congressmen and the Bush White House, appealing
for a bail-out by federal agencies or the government sponsored entities
like Fannie Mae and Freddie Mac. Just you watch!)

The Latin Builders Association-atrophied and less muscular these
days-has to double down at the time (and for the upcoming 2008
presidential election): political candidates need campaign
contributions even though there is no market, or next to none, for
suburban sprawl.

Today, the demographics of Homestead have changed. Hispanics could tilt
the vote in a new direction in upcoming municipal elections. These
voters didn't profit from the building boom so much as get dragged
under the bus by its false promises.

Homestead and Florida City turned into exactly what so many residents
and voters didn't want: a traffic snarled, sprawling mess, with a
NASCAR racetrack, a Walmart and enough ATM's not to miss a stolen one.

[Alan Farago of Coral Gables, who writes about the environment and the
politics of South Florida, can be reached at alanfarago at yahoo.com ]