Examining the exurbs
Matt Yglesias gets into a discussion on the geographical composition of the foreclosure crisis in his analysis of the situation with Blue Dog Democrats, and their alleged caving in to financial interests intent on sticking it to beleagured mortgage payers:
My look at the data thus far has been very cursory, but my preliminary conclusion would be that the hardest-hit areas are the high-growth fringes of vibrant metro areas. In Virginia, for example, Arlington County right next door to DC has a higher foreclosure rate than South Dakota. It’s lower, however, than the rate in Fairfax County — the further-out part of suburban Virginia. Fairfax’s foreclosure rate, in turn, is lower than the rates in Loudon County and Prince William County — the dread exurbs. The ring of counties around those two counties — rural areas — see the rate dropping again.
One of the thread commenters mentions his skepticism that higher gas prices are adding much fuel to the fire for hard-pressed exurban home owners, opining that such people stand to “save” a couple of hundred thousand bucks by choosing to live far out from the city center (a “savings” that, according to his logic, apparently far outweighs the recent spike in gasoline prices).
I’m not so sure about this line of reasoning. It seems to me plenty of folks in exurban areas really are facing major financial stresses these days, and higher prices at the gas station don’t help matters. In the first place, is the whole concept of buying in the exurbs really a question of “saving” $200k? That makes it sound like the average exurbanite has the option of buying a $500k house close to the city but instead opts to “save” a couple of a hundred thousand by tolerating a sixty mile commute.
I think the reality is that, in most exurbs, many of the people who have settled there have done so because that’s all they can afford. This is in contrast to city centers and close-in suburbs, which are often populated either by wealthier folks or people, who, for whatever reason, (too poor, or else young urban hipsters who haven’t started families yet) have no burning need (or ability) to be homeowners. In other words, exurbs are peopled by folks who very often are strapped for cash. Just the kind of people who got into an exotic mortgage a couple of years ago — and bought at the height of the market. There’s a heavy preponderance of residents with children, as well, and kids, as we all know, aren’t exactly cheap.
Anyway, it doesn’t surprise me that foreclosures are higher in the exurbs than either in more central location or in truly rural areas. The exurbs are where the American dream — in all its glorious excess — thrives in good times, and crashes and burns when the time comes to pay the piper.