Monday, February 4, 2008

No One Could Have Anticipated This!


A sidebar to today’s NPR story on mortgage fraud illustrates how one developer was able to “dodge the mortgage fraud bullet” that plagues Las Vegas by not allowing speculators to buy his new homes in bulk. As a result, his development has fewer foreclosures and fewer drops in property values.

Imagine that!

Like we didn’t see this one coming a mile off:
Just a few years ago, everyone was screaming for condos downtown. There’s a shortage so build, build, build. And developers did.

Now, it’s “Gosh, they built too much.” Maybe there wasn’t that much demand. Maybe the investors buying units hid the true demand for urban living. Maybe. Maybe. Maybe.

Suddenly it all looks bleak because buyers aren’t streaming in and sucking up the units in a day or just hours. Buyers supposedly aren’t in the buying mood because of the general housing malaise and talk of recession, although agents say they are working like crazy in January, usually a slow month.

Just give it a few weeks. I have no doubt we are headed for a massive real estate bust, with all of those fancy downtown condos the first to go belly up.

Yes, they overbuilt. Yes, there’s too much inventory--or rather, too much of the same inventory. How many $200,000-$1 million units do we need downtown? Who’s supposed to buy these things, anyway? You can still get a nice house in Nashville for that kind of money, you know.

Plus, Nashville has no “downtown living” infrastructure. There are no grocery stores, dry cleaners and parks downtown. Public transportation in Nashville is notoriously crappy. This isn’t Chicago or Manhattan. You can sleep and work downtown and eat in a restaurant and go to a hockey game, but for everything else you’re going to need a car to schlep to another part of town. Downtown “living” is something of a misnomer.

I’ve never understood the massive building frenzy that has resulted in Viridian, Velocity, Encore and Icon, not to mention Terrazzo, Exchange, Phoenix, Westin and the Signature Tower. I don’t understand why there wasn’t some kind of plan for more diversity of housing options, a wider variety of price points to appeal to a wider variety of buyers. Nashville has a critical housing shortage--but not in these high price ranges.

Why did they let this happen? This kind of inventory glut will ripple across the local economy, and could drag down property values everywhere. We’ve already displaced low income residents by gentrifying neighborhoods like 12South and Waverly-Belmont, and we still haven’t replaced the inventory these folks were priced out of.

And now the money quote. Was this supposed to be tongue-in-cheek?

All of this is President George Bush’s fault anyway. Five years ago, he pushed for increasing homeownership in America with programs for zero-down payment and loan programs targeting low-income borrowers.

Oh, please. You can blame President Bush for a lot of things, but this isn’t one of them. It’s the fault of greedy out-of-state developers who are not invested in our local community, just here to make a quick buck and move on. It’s the fault of a flaccid Planning Commission that never saw a construction permit it didn’t like. It's the fault of cheerleaders like the Downtown Partnership who are blinded by their own self-interest.

And it’s the fault of local reporters like Richard Lawson whose fawning coverage of the local real estate scene never raised an eyebrow of concern over all of this overbuilding. Instead, all we got was “clap louder!”