The Housing Bubble

by Nick van der Leek

The way we live is all wrong

Suburbia may seem normal, and twenty and thirty-somethings may expect to one day own their own stand alone houses, just as their parents did. There’s a strong sense of entitlement. But suburbia is actually quite new. It’s based on getting away from the industrial city, with its pollution, in exchange for the ideal of country living. But of course, as we all know, except for a small artificial lawn that has to be watered and maintained, suburbia has none of the benefits of country living. It doesn’t have any amenities of the city either because it is separated from the city, disconnected except for an essential highway system.

The writer, James Howard Kunstler, calls the suburban dream a cartoon, a caricature of what we hoped it would mean for us and our children. Suburban life really means we are not connected to what Kunstler calls ‘organic systems’. There are no forests or streams, and there is no sense of community. Of course once you’ve invested yourself into suburbia, and you realize how few benefits there are, it’s too late.

Suburbia as we know it is really just a little more than a generation old; we started seeing a quaint precursor to suburbia (based on streetcars) at the beginning of the 20th century. In the 1920’s mass motoring ushered in the first really suburban projects, and after the Second World War, suburbia emerged as the American Dream. The dream of owning a home in suburbia has obviously sprawled beyond America. South Africa and Australia and beyond also provide useful analogies to what is now, a familiar living arrangement. Our affluence – suburbia – has been based over the years on cheap energy. The world economy is based on a limited supply of oil. When depletion sets in, the middle class will simply be wiped out, and where does the middle class live? The only reason suburbia is possible at all, is because of something else that happened this century – the automobile.

Before the automobile, there were trains and ships, some horse drawn carriages too, and a fairly even spread of towns and medium sized cities. The only stand alone houses were part of large farms, with direct access to plenty of fresh water and produce. The rest were hovels and usually filled to capacity. The question emerges: is suburbia sustainable?

My situation is, having returned from living abroad for several years, I am temporarily living with my father in a house, but the expectation is that I must soon leave to get my own house. It doesn’t matter that there are three empty bedrooms; the emphasis is that a young man must go and get his own. His own house, his own car. How you do that is by getting a job. Getting a job means using your car to drive from your house, to your work, every day, and repeating this process thousands of times. Meanwhile, you use your savings, if you have any, to fill your house with stuff, and people (possibly in that order) much of which you never see because all your time is spent on your way to work, at work, or stuck in traffic on your way home.

A recent study by the Public Transport Users Association (PTUA) based in Australia published a credible report on how the automobile has diminished our freedom, and made our choices far more limited.
For example, in many countries, but especially South Africa, it’s hardly possible to live without a car. I have chosen to do so for a number of weeks, and it is frightening trying to get around in one piece on a bicycle, and difficult and tiresome to walk. The world outside of a car – and I mean, on the road – is extremely loud, dangerous and unfriendly. It’s also often unsightly, and in many places, downright ugly. People tolerate hideous urban eyesores because they can easily be ignored when the airconditioner is on, and the music is playing. Once there was a certain romance associated with maintaining a vehicle. Drive-in cinemas, camper vans, Sunday drives, picnics, candy floss and fishing rods. The cities were still fairly walkable then, and filled with two storey stores and friendly markets. Now, with the advent of speed, there is drive-by shopping (shopping for a house) drive-thru fast food, shopping malls stuffed with cinemas and gymnasiums, supermarkets, parking lots and parking garages (entire buildings dedicated to housing cars), toll gates, and endless roads bristling with traffic.

I read recently on Jim Kunstler’s blog that the housing bubble in America is close to bursting. Sales are down around 20% in a number of states, and many high-end Americans are living hand to mouth – mortgage payment to mortgage payment. It’s been said that the American economy, now that they have outsourced almost all their production to India and Asia, consists merely of Americans selling houses to each other, and money is ‘created’ by taking a second mortgage on a house. Kunstler, author of The Geography of Nowhere, asserts not only that the housing bubble (which underpins the American economy and the world economy) is about to burst, but that suburbia – a way of life for many of us – has no future.

It’s important to remember that suburbia, as we know it, is predicated on supply lines running between homes and malls, and homes and jobs (usually in cities). Another word for supply lines are commutes, and in global terms we might call them shipping lanes. Shipping lanes are what allow supermarkets to function, and supermarkets allow suburbia to feed and arm, and supply itself.

Our iPod’s are made in China, flatscreen TV’s in Korea, clothes like Nike from Vietnam, cameras and digistuff is made in Japan and so on. If those supply lines don’t work, there are no factories closer to home to turn to. Similarly, those countries import food from us. If supply lines shut down, countries will struggle to feed themselves or to function at all, simply because there has been such a high level of specialization at an industrial level, often outsourcing to faraway countries. In a world with unstable supply lines, Korea for example, the world’s fifth most densely populated country, is going to struggle to grow enough fruit and vegetables to feed a population as large as South Africa’s, but with a landmass that is just 10% of South Africa’s.

Shipping lanes are predicated on cheap energy. When oil prices rise, and they will, suburbia will begin to shut down. It will contract simply because those commutes become first unfeasible, then impossible. Supermarkets will fail, and suburbia will possibly invest in cultivation of gardens on a massive scale, because supermarkets killed local production – that means local farming surrounding big cities especially. Farming is likely to make an impressive comeback.

My brother recently bought himself a townhouse that he believes was a bargain for about R500 000. It’s tiny. Before spending a cent on his mortgage, he has to pay R1000 in fees to the body corporate fees and for gardening.

I wrote to Mr. Kunstler a few weeks ago, indicating I’d saved a bit overseas, and was considering buying a house. He advised me not to, saying cash in land, liquidity, is safer at the moment. He’s assuming a lot. For starters that the US bubble will burst. That may happen as early as this summer, in America, as a direct result of ever increasing fossil fuel prices. An imploding American economy will lead to a worldwide recession, and then you don’t want to be paying off a bargain nobody else wants, at a time when no one has any money. Meanwhile, between 2004 and 2005 we’ve enjoyed the strongest global growth since the 1970’s. Is the penny about to drop? I’m holding onto mine for a little bit longer, as least until the American summer and our winter, is over.

You can order the DVD ‘The End of Suburbia’ from Amazon.com