The costly legacy of ignoring economic geographies

A piece in the New York Times discusses prospects for the housing market in the US. It offers little hope of any impending recovery in the US housing market, despite all the talk of “green shoots.” As a consequence, it expects further pressure on the banking industry and the financial markets as increasing numbers of mortgage-holders default. Another article in the NYT talks about a city-downscaling initiative in Flint, Michigan – the city made (in)famous in Michael Moore’s 1989 documentary Roger and Me.

Flint, Michigan

Flint, Michigan

The article provides many insights on the impacts of the financial crisis on the realities of communities and planners. In some parts of the city, foreclosures have left neighbourhoods denuded of residents and hence much-reduced tax bases. One solution being considered is the relocation of the remaining residents in some of these areas to other parts of the city that are considered to be “more viable.” The vacated neighbourhoods would then be razed and the land given over to nature with the city saving revenue by not having to provide services in low population density areas.

Both articles raise questions about what might happen in Ireland in light of the continuing decline in our housing market, further increases in unemployment, and the seemingly inevitable march towards nationalisation of the banking system with the birth of NAMA. In an interview on RTE radio, Mick Wallace, a well-known property developer, made a few interesting statements regarding NAMA and what it could realistically hope to achieve. Few developers want to be associated with NAMA, so Mr. Wallace’s comments on the role and potential efficacy of the organisation need to be considered in this light. Notwithstanding the issue of bias, Mr. Wallace made a very salient point: If, as the Government has stated, NAMA is to take charge of the assets of “distressed” developers and dispose of them at a profit to the State, they are going to have to sell houses in half-completed estates in Longford, Cavan, Laois and other counties; but who will buy these houses? Furthermore, if emigration becomes an established trend, future demand for housing and hence development land is also going to fall in value, particularly in those areas distant or inaccessible to larger towns and cities. Who, then, is going to buy greenfield sites at development land prices?

All of these sorts of questions raised in the national media at the moment are questions regarding Ireland’s future population and economic geography. Does this crisis make public representatives more cognisant of poor planning decisions in the past; planning decisions which some believe is a millstone hung around the necks of this and the next generation of tax payers in Ireland. More immediately, policymakers are finding their options for cutting costs and reducing spending thoroughly constrained by past planning choices. They are also faced with new challenges in the form of significant unemployment in rural areas and the reality that many social problems we face currently will persist into the future. Will the next stimulus package for the construction industry be based on the demolition of unwanted houses and the return of land to agricultural purposes?

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One comment

  1. http://tipstrategies.com/archive/geography-of-jobs/

    This is a link to a pretty cool map showing the areas in the US that have been affected most by the economic recession. All of these areas are going to have pretty serious problems in mortgage defaults in the future I’d imagine.

    Like

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