Sunday, November 14, 2010

More Sun Belt Bust

Leaving Las Vegas is picking up steam. But that's not the only Sun Belt boomtown doing the Rust Belt-like bust. The big story continues to be the lack of inmigration in cities such as Charlotte:

The onslaught of students flooding Gaston County Schools hasn’t happened. ...

... “Those are not going to be met, and I don’t think anybody expects they are,” said John Chesser of UNC Charlotte’s Urban Institute that studies public policy issues in the 14-county, two-state region surrounding Charlotte. It’s also one of the organizations that helped the school system come up with its student population projections. “A lot of that anticipated growth has already not happened. It was anticipated growth every year ...I expect the district’s already figuring it out.”

School districts across the Sun Belt are coming up short as migration-driven economies collapse. Many hope that the pipeline will fill again, but the recovery remains sluggish. For those communities who already bet big on the continued boom, fiscal disaster is not far off. Whatever the revenue scheme, less money is trickling into the public coffers.

Back to the article in the Las Vegas Sun, some are not so pessimistic:

Lang thinks our economic prospects are better than many of the doomsayers realize.

He points to cities hit hard by the savings-and-loan crisis of the early 1990s, which was a debt-fueled commercial real estate bubble that burst and left cities such as Denver, Houston and Phoenix reeling.

When those cities suffered their real estate collapses and finally cleared away the debris — with the help of the government’s Resolution Trust Corp. — they had an advantage relative to other cities: cheap real estate.

Similarly, Nevada real estate is again a comparative bargain next to California. As California recovers, residents there who aren’t underwater will be happy to sell their homes and move to Las Vegas for something cheaper and bigger.

Lang also thinks economic seeds — some unrecognized — are waiting to spring to life.

He cites the potential for Interstate 11 to Phoenix; the development of high-speed rail to Victorville, Calif.; the new terminal at McCarran International Airport; continued development of renewable energy projects; expertise in green building fostered by the construction of CityCenter; and the opportunity for Las Vegas to become a center for specialized expertise in the global gaming business, as Houston is in energy and Los Angeles in entertainment.

Touting cheap real estate reminds me of bleak Rust Belt or rural hopes. There's plenty of opportunity everywhere. Who doesn't have such assets? The bright future scenarios still read like wishful thinking. Everything and everyone will come back. That kind of mindset will be the death of the Sun Belt.


Stephen Gross said...

It's an interesting point... On the one hand, the Vegas boosters are smart: they're playing up their advantages (perceived or otherwise). When life gives you lemons, make lemonade, right? All that empty real estate is: cheap houses waiting to be bought!

Of course, the Vegas boosters don't have a very strong grasp of demographics and relocation, eh?

Jim Russell said...

The big debate is about cyclical versus structural. Is Las Vegas experiencing what Seattle went through in the 70s or what Pittsburgh went through in the 80s?

The Interior West is full of boom-bust stories. A few cities, such as Denver, broke out of that pattern. It is possible that Las Vegas could follow in the footsteps of Denver thanks to this crisis.

I think this crisis is more structural than the boosters realize.