Last Sunday, the Boston Globe envisioned what a depression would be like for the middle class. But maybe the people already suspect.
Great trends tend to happen low to the ground. People start doing something before social scientists and economists point it out and give it a name. Consider suburbanization and de-suburbanization.
Most people think the great trend to living in suburbs burst to life in the Ozzie and Harriet era. After World War II, returning GIs married and looked for safe neighborhoods where land was cheap and schools were new. In 1947, Levittown became the symbol of the new suburbia as the builder announced it would construct a record 2000 look-alike houses a year. By 1951, the development had sold out. Similar communities bloomed across the country in the 1950s. Suburbia was born. That's the popular story, anyway.
Ahhh... history as we believe it. Not quite the same thing as history as it happened. The move away from crowded city life to the suburbs did not begin after World War II. It started in the 1920s. The Great Depression interrupted the process and set it back 20 years.
Cities were dirty back when factories were urban features and streets were crowded. In the 20s, the car and rail lines made it possible to move an average middle-class family away from the congestion and dirt of central cities. Dad could commute, preferably by car.
Then came the Great Depression. What car? What gas money? What job?—unemployment reached 25% in the worst of the depression years. Suddenly being out where there were no factories and commercial zones was not such a great idea.
This time, if we have a new depression, we could see the same aversion to living too far from the city, but with a different effect.
In the Depression years, people who lived in cities stayed put. They forgot about moving out to the land of grassy yards and barbecue pits. This time, they are already in suburbia, but may find it convenient to leave and go back to urban areas. Especially if the housing/mortgage problem does not get a lot better.
Another difference this time is size. The first flight from the cities left neighborhoods of mansions and goliath-sized Victorians to be split into rooming houses and apartments. This flight would leave acres of McMansions—to be what? There's little need for dense-housing solutions where there's no density of work.
In the original move to suburbia, middle class families were seeking modest homes. The Levittown home averaged 800 square feet. In the 1960s, home sizes had grown to an average 1,100 square feet. Today's new suburban developments boast homes averaging 2,300 square feet—such monsters are about the last thing a cash strapped family will be able to support in a depression. In the suburbs of Tampa, Florida, 22-29% of homes for sale are foreclosures or short sales, much of them larger, new homes.
There is a little stickiness to suburbia, though. Most of the people living in the suburbs today have never lived in cities or the country. People who lose homes often want to rent homes instead of moving to apartments, according to a VP of C.B. Richard Ellis in Phoenix. The glut of foreclosures and abandoned homes has made some of these rental houses cheaper than the homes people lost in the first place.
It's also hard to track rental trends as condos turn into apartments after the real estate bust. So the experts don't know for sure whether a flight from suburbia is shaping up or not. Though there is plentiful evidence that apartments are in greater demand in most Canadian cities and in the U.S. outside the Midwest and Southwest.
But what do the people know? Amid all the Obama-drama in this past historic election, something interesting happened. It was unplanned, unheralded and huge—almost as if perfectly coordinated. You would have to call such a thing a trend. Across the country, voters passed 70% of the referendums to fund mass transit projects.
Maybe the middle class isn't eager to leave suburbia yet, but a little help getting around looks better. Companies like Siemens and Bombardier certainly hope so, as they would be the two biggest winners in mass transit projects. But even with a bailout, I wouldn't bank on GM's comeback.
