A reader passes along word of a sign seen in Phoenix: "Please God, let there be one more housing boom and this time I won't piss it all away." Yes, you would. To paraphrase Linda Hamilton in Terminator: It's what you do. It's all you do."
The bad news isn't just that Phoenix continues to lead the nation in house-price declines — down a stunning 32.7 percent for 2008. It's not just that the bubble is only 60 percent deflated nationally, by some estimates — so good luck with that spec house in Maricopa. It's that the whole Ponzi scheme is over.
Urban theorist Richard Florida calls cities like Phoenix and Las Vegas out in an influential article in the March issue of Atlantic magazine. The title: How the Crash Will Reshape America. "The boom itself neither followed nor resulted in the development of
sustainable, scalable, highly productive industries or services. It was
fueled and funded by housing, and housing was its primary product.
Whole cities and metro regions became giant Ponzi schemes." In other words, pissed away. Now it may be difficult for Phoenix to avoid being one of the biggest losers as the competitive geography shifts decisively because of the Great Disruption.
Florida writes:
cities—Phoenix and Las Vegas are the best examples—developed economies
centered largely on real estate and construction. With sunny weather
and plenty of flat, empty land, they got caught in a classic boom
cycle. Although these places drew tourists, retirees, and some
industry—firms seeking bigger footprints at lower costs—much of the
cities’ development came from, well, development itself. At a minimum,
these places will take a long, long time to regain the ground they’ve
recently lost in local wealth and housing values. It’s not unthinkable
that some of them could be in for an extended period of further
decline.
And
empty sprawl and all the ills that accompany it? Will these cities
gradually attract more businesses and industries, allowing them to
build more-diverse and more-resilient economies? Or will they subsist
on tourism—which may be meager for quite some time—and on the Social
Security checks of their retirees? No matter what, their character and
atmosphere are likely to change radically.
Florida agrees with me that the old age of sprawl, based on cheap gasoline and easy credit, is essentially over. And the winners coming out of this mess will make the spatial shift necessary for ideas and innovations to percolate, to livable, dense cities, and suburbs retrofitted for an age of more expensive energy. Let's see how that goes over in Phoenix — where Florida spent quite a bit of time trying to convince people not to piss things away during the boom.
Now that Dubai is cratering, I wonder if Phoenix leaders — such as they are — realize they will be in for the fight of their lives just to retain what assets they have. I worry about T-Gen, for example, with the downtown biomedical campus still far from the critical mass needed to attract and sustain world-class talent and research. Don't believe for a moment other states aren't going to court them. Meanwhile, the Kooks are in charge, so even the meager breadcrumbs from Saint Janet will no longer be coming.
Too bad. Imagine if the revenues flowing during the boom had been appropriately taxed — hey, people will move here no matter what, they kept telling me. Then the state could have made a commitment to the downtown campus to build a hospital, provide incentives for biomedical manufacturing, big phrama research, and making the combined medical-nursing-pharmacy colleges into top institutions. The view from "the Valley" would look far more promising.
As it is, February is in the eighties, only reminding most Phoenicians of the hellish weather on the way. Other torments, too.
T-Gen suspiciously announced a “strategic partnership” with Van Andel Research Institute of Grand Rapids. I suspect that means “VARI has money that we don’t have.” Dr. Jeff Trent will not split time between Phoenix and Grand Rapids, who now also holds title of President and Research Director for VARI.
At what point does VARI just swallow up T-Gen and move the whole thing to Grand Rapids? Two locations/facilities aren’t better than one in the dollar-starved industry of research.
In retrospect, you see the failure to decide as part of a recognizable fabric of avoidance. Our attention wasn’t concentrated on a hollowing-out economy so much as believing the good times would never end.
It’s human nature to see the road ahead the same as the road behind. Even today, there’s a forlorn but widespread idea among Arizonans that this collapse will heal itself, that even as we sift through the wreckage, new investments will miraculously emerge. But the main show? Done, gone, kaput.
All that real-estate hustle, the deals, frauds, and manias of the last 60 years, are finished. Hotels will close, far-flung subdivisions will gather tumbleweeds, and Phoenix itself will take on the haunted look of an aging starlet.
So, what does a major metropolitan area do when its raison d’etre has not only collapsed but cannot revive itself? I only know Phoenix one way, as a perpetually booming place, where even recessions were shrugged off. The difference this time is that the recent experience of central Phoenix – struggle and decay – will become even the suburbs’ experience. I’m strapped in and ready to enjoy the descent.
Read the very last line of this article:
https://www.slate.com/id/2211882/entry/2211884/
Well, I left Phoenix almost two years ago. Quit a rewarding job at a college, with okay pay and good benefits, a job that I’d probably still have if I’d stayed. Now I’m in Seattle, with a half time job at crappy pay and occasional free lance work.
But I was bored out of my mind in Phoenix.. I’m much happier here back with friends who have more to talk about than sports teams and real estate. Even if they’ve lost their jobs too– at least they have a lot going on. Last month I volunteered and worked hard to help install a new temporary sculpture park in Burien. It seems like there’s always something fascinating and cool going on.
Richard Florida is absolutely right.
I miss the college, but I don’t miss telling my students they had to leave Phoenix if they wanted to have a career.
So you’re saying it’s a great time to buy? Sounds like that to me.
“No matter what, their character and atmosphere are likely to change radically.”
This bust is the BEST THING that could happen to Phoenix. It will either force change and revive itself or it will become obsolete and die?