Don’t be surprised to see America’s Tomorrowland going retro.

The glut of foreclosed homes, abandoned houses and half-built subdivisions will reshape tomorrow’s real estate landscape into cities and towns reminiscent of the pre-World War II era, urban and community planning experts predict.

Picture bustling downtowns with twentysomethings and empty-nesters living in high-rise condos, suburban villages with light-rail lines, quaint shopping districts and scaled-down McMansions …

Editor’s note: The foreclosure crisis is reshaping cities and towns across America. Planners are taking note of contributors to the current problems and are taking action to address the crisis while avoiding such massive fallout in future real estate market downturns. This three-part series focuses on the how the foreclosure wave has hit suburbia, urban communities and rural communities and how they are responding to the challenge.

Don’t be surprised to see America’s Tomorrowland going retro.

The glut of foreclosed homes, abandoned houses and half-built subdivisions will reshape tomorrow’s real estate landscape into cities and towns reminiscent of the pre-World War II era, urban and community planning experts predict.

Picture bustling downtowns with twentysomethings and empty-nesters living in high-rise condos, suburban villages with light-rail lines, quaint shopping districts and scaled-down McMansions and rural towns with public transit stops and high-density mixed-use complexes designed for shopkeepers, homebuyers and renters.

Some might call it "The making of surburbia in rewind" — a tale written by government and civic leaders, planners and scholars who are grappling with the nation’s worst housing crisis since the Great Depression. Suburbs and exurbs may never be the same as officials reinvent planning models to guide future growth in the coming decades.

More importantly, officials will be forced to consider economics and finances as much as they do land use and environmental issues in their policy decisions. Consumers, too, will look beyond interest rates and monthly mortgage payments and factor in the true cost of suburban life, including gasoline prices, insurance premiums, congested roadways and commute times. Suburbia may no longer be a bargain.

"Planners typically never thought about these issues," said Casey Dawkins, co-director of the Metropolitan Institute at Virginia Tech University in Alexandria, Va. The foreclosure crisis is "causing a lot of planners to rethink the way they use their information."

For now, though, planners and other government officials are simply trying to cope with the explosion of foreclosures and are scrambling to stabilize distressed neighborhoods and the growing number of vacated houses.

"People are just beginning to come to grips with this. They are in shock," said John McIlwain, senior research fellow at the Urban Land Institute in Washington, D.C.

The numbers are numbing. More than 1.2 million homes went into foreclosure in 2008. Analysts project 8 million more will be in foreclosure from 2009-12, hitting hardest the once fast-growing regions in South Florida, the Sun Belt and inland California.

Fort Myers, Fla., held the dubious distinction as the nation’s foreclosure capital last year. It served as the backdrop for President Obama’s push for his $800 billion economic stimulus plan in February.

"I know entire neighborhoods are studded with foreclosure signs, and families across this city feel like they’re losing their foothold in the American Dream," Obama said during his tour of the hard-hit southwest Florida community.

Lee County Commissioner Brian Bigelow says the troubled Fort Myers suburb of Lehigh Acres is the national symbol of a boom-and-bust community.

The sprawling community was conceived in the 1950s by developers who bought thousands of acres of farm land and carved out 100,000 lots, leaving little room for parks, schools and even businesses.

For decades, most lots stayed empty until the housing boom erupted in the early 2000s. Lots selling for $1,000 to $2,000 in 2002 fetched $6,000 or more two years later — even though some outlying sections didn’t even have electricity. There were no sewers, only septic systems.

By the end of 2006, more than 28,000 houses were built in Lehigh Acres and investors ran up prices by flipping houses time after time — some homes sold and resold without ever being occupied. Then the bottom fell out. Today homes sell for about $45,000, roughly a third of what they cost to build.

"Everyone is in just dire straits. We’ve got this crisis and everything has hit a brick wall," Bigelow said. "We’ve got to take on Lehigh Acres as an area that deserves our overdue attention. It has all these lots, one after another, and this checkerboard of roads that seemingly go on forever," he said. …CONTINUED

"We’ve got to figure out a way to be more sustainable, where people don’t have to use their cars for work, school or entertainment," Bigelow said. "We can’t sustain suburbia here. This foreclosure crisis points out this fatal flaw."

Some experts agree with Bigelow. They predict suburbia as we know it is doomed. And the most devastated suburban communities could become 21st-century ghost towns.

"People have been moving farther out in large numbers since World War II. This is a 70-year phenomenon that we are now seeing end," said Urban Land Institute’s McIlwain. "What we have done is create these outer-edge ghettos that aren’t going to come back."

The post-war flight to new suburban homes, schools and shopping centers, including mega-malls, sparked a methodical erosion of inner-city neighborhoods.

Now, many suburbs are suffering the same problems that plagued the big cities: neighborhoods littered with vacant and abandoned houses; increasing crime and vandalism; declining home values; a shrinking tax base; overgrown yards; and mosquito-filled swimming pools. Job losses, long commutes, crowded highways and high energy costs are prompting many families to reevaluate suburban life, experts say.

"Planners have to throw away the 1970s concept. Planners have to be more responsible for long-term sustainability — not just environmental sustainability, but financial sustainability," said Dan Immergluck, a planning expert at Georgia Tech University who was a visiting scholar for the Atlanta Federal Reserve Bank.

For government officials, the more immediate goal is stemming the tide of foreclosures, keeping neighborhoods intact and getting vacant homes reoccupied.

Officials nationwide are mapping out plans to use $3.92 billion in federal Neighborhood Stabilization Program funds to buy and rehabilitate homes for resale, work with homeowners to prevent foreclosure, and gear up to raze dilapidated buildings.

Some communities have assembled special coalitions and task forces such as the "Red Team" in Southern California’s Inland Empire. The group, composed of business and government leaders, has crafted a proposal aimed at combating an estimated 250,000 homes at risk of foreclosure in Riverside and San Bernardino counties. Currently, about 100,000 homes are in foreclosure or default in the two counties.

In Ohio, the state organized a Foreclosure Prevention Task Force, while Maryland created a Homeownership Preservation Task Force.

At the same time, some cities have beefed up ordinances to stabilize neighborhoods and combat blight, enacting foreclosure registration fees, increasing nuisance abatement fines and penalties, and pressuring lenders to maintain upkeep on vacant properties.

In Chula Vista, Calif., the second-largest city in San Diego County, code enforcement manager Doug Leeper crafted a precedent-setting ordinance that compels mortgage lenders to take responsibility for abandoned houses sooner.

"We had fires, theft and nasty things happening to these properties," Leeper said. "When I saw the first signs of defaults being recorded I looked at the options."

Previously, lenders let defaulted properties stay empty until they assumed title — a process that could take several months or even a year.

The new ordinance, adopted a year and a half ago, bridged that gap and put the onus on lenders to maintain abandoned homes. The measure has gained national attention, with more than 350 cities contacting Leeper for information about the ordinance.

To date, Chula Vista has received $160,000 in registration fees and levied $1.4 million in fines and penalties, of which $700,000 has been collected. "We are finding fewer violations. I’ve noticed a much greater willingness from lenders to take the proper action."

Despite market upheaval, government officials and builders are bullish about suburbia’s future. They say the appetite for ranch-style, single-family homes remains strong, and suburban growth will resume once the economy rebounds and the abundant inventory of homes shrinks. The reason: The population will continue to grow, and that will boost the demand for new housing.

"I don’t see the taste for single-family homes changing dramatically. A lot of this empty territory will eventually be filled up," said Bernard Markstein, senior economist and forecasting director at the National Association of Home Builders. …CONTINUED

Economists say former high-growth cities such as Las Vegas and Phoenix are likely to build themselves out of the economic hole. Las Vegas is banking on tens of thousands of new jobs emerging from the construction of major casinos on the famed Strip. Phoenix foresees a new migration of Californians cashing out of their pricey homes and settling in Arizona.

"I don’t see development patterns changing. A lot of people say this is one of the first areas that is going to take off," said Tim Tilton, a principal planner for the city of Phoenix, which ranked ninth among U.S. cities in foreclosures in February.

Rich Bishop, executive director for the Western Riverside Council of Governments, said California’s Riverside-San Bernardino region also won’t see any letup in growth over the next 25 years. The Inland Empire will need 350,000 to 400,000 new homes to accommodate an estimated 1 million new residents.

"There is going to be a continued demand of housing and a lot of it. The high-growth areas are still going to have building," Bishop said.

Phoenix expects the northern and southwest sections of the 517-square-mile city to see further expansion and live up to the local homebuyer mantra of "drive until you qualify."

Even so, the city of Phoenix faces plenty of undeveloped infill land and a downtown crying for more residential development. "There are a lot of condos going in. This is sort of a downtown renaissance," Tilton said.

Other cities have launched new downtown high-rise condo complexes with retail, office and recreational amenities. San Diego, for example, has revitalized its historic downtown Gas Lamp District with new housing projects.

Former industrial cities are poised to ramp up plans to convert mothballed factories and mills into self-contained communities with a mix of housing, retail and office space.

Developers are counting on aging baby boomers tired of long commutes and younger singles and families attracted to a vibrant city life to lead the inward march to the downtowns and inner-ring suburbs.

The trend is emerging even in California’s farm-rich Central Valley. Modesto is targeting similar downtown development as part of its answer to future housing growth. Modesto, which registered the fourth-highest foreclosure rate in the U.S. in February, has attracted homebuyers seeking relief from hefty prices in the San Francisco Bay Area some 90 minutes away. The recession stalled two 100-unit downtown housing projects that had been ready to go.

"The interest is there. People are changing their lifestyle," said Brett Sinclair, Modesto community development director.

Modesto is in the midst of a new five-year urban growth review, and discussion is likely to include downtown development and attracting new employers so that residents can forego grueling daily commutes to work.

"We may not get back to those historical levels of growth. We need to focus on providing not just housing, but attracting jobs," Sinclair said.

The buzzwords for the future: diversity and density. That includes reviving the idea of building walkable suburban communities, creating transit hubs, expanding rental housing, inventing new uses for vacant buildings and land, and building smaller houses on smaller lots.

It won’t be easy.

"You can’t force higher density and mixed use on people," Western Riverside Council of Governments’ Bishop said. The public and political will must be there, he said.

"It’s going to take leadership at the political level," Urban Land Institute’s McIlwain said. "Density is a four-letter word. Politically, it is going to be very difficult to do."

Yet, experts say cities may have no other choice to survive the fallout from the mortgage crisis.

"This is the new reality," said Bill Spikowski, a city planning expert in Fort Myers. "You can’t build enough roads. The suburban dream isn’t working when you can’t move around. We will have a more urban future."

Gilbert Mohtes-Chan is a freelance writer in California.


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