Wednesday, June 11, 2008

No more "Drive until you qualify"

Did you feel that? No? Were you paying attention? The US just crossed another invisible line along the path leading to economic collapse. In the real estate biz we have called it "drive until you qualify." 

The idea was simple enough. Many people could not afford housing near urban areas where they worked, so the solution was to drive out of the city far enough for the housing prices to drop to a level where their income from their city job would qualify them for a mortgage. But now fuel prices have risen too high to make the drive until you qualify solution work anymore. The distance you have to go out from the city to get the mortgage low enough to qualify now costs too much for fuel!

Affordable housing has been a problem for longer than I have been alive. A few years ago when I was embroiled in some drama related to the abusive business practices of the airline against our union pilot group I had occasion to re-read the Upton Sinclair classic "The Jungle" about the Chicago meatpacking industry. It is an illuminating description of various abusive practices including some of the stunts the "powers that be" used to pull on the poor laborers. My favorite was the one where they sell the same little shack over and over again. The issue of affordable housing is nothing new. But Peak Oil is causing a more fundamental shift than just mere difficulties with finding affordable housing.

Check out this Bloomberg article titled "Wealth Evaporates as Gas Prices Clobber McMansions  http://www/

This is a fundamental shift in the economics of suburban america.

We have just crossed over the invisible line formed by the boundary between cheap energy and overpriced-energy-inefficient-poorly-designed-housing.

The core concept to understand here is that most of the US is built wrong! Let me say that again because this idea is so radical that many people I talk to about this don't get it or don't believe it. 


Suburbia does not work! The reason is because all the light rail mass transportation was bought up and intentionally excluded from land use planning of all our suburban communities. You can read up on "The Great Streetcar Scandal" on Wikipedia to get a better picture of part of the problem but the inadequacy of the design of american suburbia is deeper still. We have built out the entire country based on the design of suburban living where people move about individually in personal automobiles running on cheap energy from oil. Period. That's it. And that is the problem. The government and land use planners didn't make the slightest effort to build towards sustainable living and transportation based on renewable energy sources. Even after the 1971 Peak in US oil production! Developers of suburban housing tracts were never required to design efficient transportation into the core of the country. Every aspect of the development of suburbia was driven by the short-term profit of the wealthy and their corporations instead of long term sustainability.

And now, things have gone too far. And there is no solution. It is too late to change the entire country full of suburban designed city layouts. For one thing, it takes vast amounts of energy to change the layouts of cities and suburbia. More than the energy we spent to build it. We definitely do not have the energy to re-build the majority of the country and redesign mass transportation into the core of communities. Not to mention the eminent domain issues. We don't have the capital either especially with the global shadow economy and the black iceberg in the form of trillions of dollars of derivatives.

The big illusion that is currently prevailing is that some magical mumbo jumbo "technology" is going to come to the rescue and americans will be permitted to perpetuate the energy impossible lifestyle of suburbia. People think that "they" are working on it. WAKE UP! The only THEY out there is WE, you and me. Perpetuating suburbia is not possible. Stop fooling yourself. 

Dreaming about a bunch of hybrids or plug-in vehicles isn't going to change reality. None of those technologies can be SCALED up big enough to provide a solution. I actually meet people who believe that we are just going to keep buzzing around in 230 million private vehicles while some inventor wizard drops a new hydrogen engine into their SUV over the weekend! What a joke. But the joke is on us.

I have clients who have physically left the US just because of the so-called "Patriot Act." Some have ex-patriated. I have others who just moved to protect their assets. Those are important but fundamentally different issues. But many people are now discussing the long term viability of a country where the fundamental design of the majority of the living and working space is totally unviable.

The dysfunctional impossibility of suburbia is one of the most critical impacts of Peak Oil. No more drive until you qualify my friends.

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