Going Bust in Loudon County
Great piece by Michael Laris in The Washington Post about ambitious real estate development gone bad in Loudon County, on the fringes of the DC metropolitan area:
They said it would be a new Reston or Columbia, 35 miles west of Washington — the biggest development in Loudoun County’s history, with more than 15,000 homes filling communities with such names as Greenfields and Broad Run Village.
Now a real estate shopping spree that made the company Loudoun’s largest landowner at the height of the nation’s housing bubble has been jerked into reverse, with a key lender moving to foreclose on more than 4,100 acres Greenvest companies pieced together for the project. The land is scheduled to be auctioned off Tuesday morning outside the historic red-brick courthouse in Leesburg, provided there is no bankruptcy filing or last-minute deal.
Part of the tragedy of our recent boom/bust cycle is that we really don’t seem to have amassed a huge amount of worthwhile stuff during the overinvestment phase. The dot-com boom at least led to the creation of a lot of bandwidth and web-related human capital that folks continued to use even once the madness of Pets.com wore off. Some of what happened in the housing bubble is at least somewhat like that—immense condo oversupply developed in DC proper but the trends indicate that it’ll be filled sooner or later and the country really does have relatively few housing units existing in walkable urban areas.
By contrast, it’s not as if when you turn the clock back to 1999 that there was some objective shortfall of largish homes in sprawling suburbs in the United States. And nobody really wants extra ones. Even in Spain where they disastrously overbuilt beachfront property you can imagine the prices resetting and people using the homes. But there are only so many households in the United States, and both the demographic (fewer families with kids) and energy (more expensive) trends point toward somewhat less demand for this sort of thing in the future.
14 Responses to “Going Bust in Loudon County”
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August 25th, 2009 at 2:01 pm
Not sure the size of families has/has had any relationship to the proliferation of McMansions. The number of kids per family had settled down long before the size of houses ballooned. It’s a status thing, pure and simple, and driven more by easy credit than anything else.
August 25th, 2009 at 2:21 pm
in other words,the greenspan bubble was another incredibly wasteful, destructive fuck-up, brought to you by george bush.
August 25th, 2009 at 2:28 pm
Land bought, land foreclosed. It is still land, just as it was before the bubble. There should be no large effect.
August 25th, 2009 at 2:28 pm
Somali refugees could probably learn to love McMansions.
August 25th, 2009 at 2:54 pm
This is the consequence of having the financial services sector, including real estate and insurance of all kinds, being such an outsized part of our economy. It really doesn’t produce much of anything at all, except a small bunch of brash, obnoxious, overpaid people. I look forweard to the day when people go back to making things rather than pushing paper and gambling.
And yes, I understand that making houses is making things, but there is a huge finacnial services infrastructure that supports making those houses, and the actual “making” is the least of it and mostly done by immigrant labor, at least here.
August 25th, 2009 at 3:06 pm
A big house is like a pretty hat. Not a lot of utility there.
August 25th, 2009 at 3:08 pm
That would just lead to piracy on the Beaver Dam Reservoir.
August 25th, 2009 at 3:43 pm
A big house is like a pretty hat. Not a lot of utility there.
Oh, I dunno. I figure that the slumlords of America are enterprising enough to turn a profit on a subdivision full of cheaply constructed McMansions by turning it into a slum full of cheaply constructed and hastily partitioned apartments.
Of course, that’s probably not what the good people of Loudon County want to hear.
August 25th, 2009 at 3:49 pm
4,100 acres is 6.4 square miles. That would be a pretty nice-sized state park for a county that, due to sprawl, doesn’t have the space for nature that it used to.
August 25th, 2009 at 4:46 pm
People exchanging land around isn’t a problem. People wasting resources (labor and materials) actually developing that land for markets that are unlikely to exist in the future is a problem.
That said, I agree the solution in many cases is likely to be slums, not complete abandonment.
August 25th, 2009 at 4:49 pm
Continued massive immigration was a background assumption of the Housing Bubble. But immigrants were coming less out of a deep love of American freedom and more to make money off the Housing Bubble, making the logic of the Bubble circular.
August 25th, 2009 at 7:16 pm
Wrong on both counts. The percentage of households with kids has been going down for 50 years. Energy prices increased for more than a decade from the 60s to the 80s. But demand for sprawling suburbs kept going up. You’re ignoring the effects of rising real incomes and improvements in efficiency.
August 26th, 2009 at 12:23 am
Real incomes didn’t rise that much.
August 26th, 2009 at 3:29 pm
Continued massive immigration was a background assumption of the Housing Bubble. But immigrants were coming less out of a deep love of American freedom and more to make money off the Housing Bubble, making the logic of the Bubble circular.
Um, Steven, this is different from my family coming over 375 and 75 years ago how exactly?