Opening morning for the Phoenix light-rail system. (Flickr/funwithfred)
Mayor Michael Nutter of Philadelphia may be in charge of a beautiful city, but he doesn't have much to take to the bank. Last year Philly's creditors put the city on a negative-ratings watch, following a borrowing spree that resulted in a couple of stadiums and a heap of bribes for a city treasurer who was hauled off in handcuffs. Last year, Philadelphia hiked taxes and squeezed pension funds to fill a quarter-billion-dollar budget gap.
Commuters arriving in Brooklyn via the Manhattan Bridge are greeted with a shiny vision of New York City's future that never came to be: condo buildings with names like the Oro, the Toren, and Forté, towering monuments to real-estate developers' credit-bubble hubris. Two-bedroom apartments in the Oro were priced at nearly $1 million apiece; today, just 90 of 303 units have been sold. The Forté would have gone into foreclosure had its developer not voluntarily relinquished the building to the bank, losing investor Goldman Sachs its $13 million stake. Property records declare 37 of its 108 units purchased, and the high-rise itself feels even lonelier -- as night falls, just a few windows in its upper reaches are illuminated.
Locks and spider webs are seen on the entrance door of a foreclosed Atlanta home. (AP Photo/Gregory Smith)
To get to Pittsburgh, a historically black neighborhood south of downtown Atlanta, I drive past several boarded-up and burned-out homes. Turning onto McDaniel Street, I steer around a pile of clothes and toys spilling out into the road. "Lord, behold, a family's house foreclosed and their possessions just thrown out there," says LaShawn Hoffman, CEO of the Pittsburgh Community Improvement Association, from his storefront office down the block. This is one of the vastest foreclosure zones in the nation. On maps of bank sales, Hoffman observes, "you almost can't see the community because of all the red dots." His organization has counted them: It found six out of 10 homes in Pittsburgh are now vacant, casualties of foreclosure with wood planks and metal shields guarding their windows.
History will recall 2005 as the year the credit bubble grew fattest--when in much of Florida and California, real-estate prices doubled in a matter of months. But in Cuyahoga County, Ohio, it was the year that nearly 12,000 homes were abandoned to foreclosure, leaving streets littered with boarded-up houses. Many of the home sales turned out to have been between speculators selling property to one another at rigged prices, using phony paperwork. Other borrowers fell prey to sub-prime refinancing that put cash in their hands but lost them their home.
It's not often that residents of the devotedly liberal precinct of Prospect Heights, Brooklyn, agree with Antonin Scalia and Tom DeLay. But the Supreme Court's decision last month in Kelo v. City of New London struck a nerve in this neighborhood and in others across the country where governments are coming in, forcing property owners to sell, and handing over that real estate to private companies.