Things should be all better -- in about 30 years

The Brookings Institute fellow and distinguished scholar of the suburban living arrangement has decades of experience in real estate development and urban planning. The meme of doomed suburbs went mainstream with his cover story for the Atlantic magazine last March, ‘The Next Slum?’ The problem, he says, goes much deeper than the foreclosure crisis. It’s part of a painful societal adjustment that will take a generation or more to work through.

So where’s the bottom? Or, rather: Is there a bottom?It’s not a matter of waiting for two or three years to absorb the overproduction. It’s a matter of drastically reducing real estate prices to well below replacement cost. And when you sell something for below replacement cost -- that might sound like, well, ‘Somebody takes a hit but life goes on as usual.’ No, life doesn’t go on. For the owners of that retail or housing space, every dollar that they invest will be money they don’t get back. That is another definition of a slum. There’s no incentive to invest in a slum. So here you are. You buy a 4,000-square-foot house 40 miles outside town. You think, wow, I got a great value. But when the roof begins to go, you just patch it, because if you put a new one on, it’ll cost $20,000; you’ll still be at the same selling price. So, why do it?