Surprise! The rise and fall of the Western exurb

Surprise, Ariz., doesn't look very surprising. It might be anywhere in the suburban West. Home Depot and Wal-Mart rise like islands from an ocean of pavement, and late-model SUVs gleam in the midday sun. Homes with red-tiled roofs line up like stucco boxes on a giant supermarket shelf. There's little to distinguish this from the hundreds of square miles of housing developments that have sprouted around Las Vegas and San Diego. If it weren't for the palm trees, you could be in suburban Salt Lake City.

But only Surprise has the Radiant Church. Inside this 55,000-square-foot behemoth, 50-inch plasma-screen televisions display huge images of American flags. Starbucks-trained baristas serve up frothy espresso drinks, and the casually dressed congregation nibbles Krispy Kreme doughnuts. The pastor, Lee McFarland, wears jeans and rides a Harley. His uncanny ability to tap into the exurban zeitgeist made this the fastest-growing megachurch in one of the nation's fastest-growing metro areas.

Radiant symbolizes the breakneck growth and prosperity that have come to define Surprise and its Western siblings. Since it was incorporated in 1960, Surprise -- an exurb of Phoenix -- has burgeoned from 500 people to over 100,000 people spread over 100 square miles. Most of that growth happened in the last decade, and it happened largely independent of any economic base, such as manufacturing, mining, farming or even high-tech industry. Instead, growth created its own economic base. To the members of Radiant Church, it must have seemed like a miracle.

Now it seems more like a mirage. On a warm day a few months back, about 200 people -- mostly female and Spanish-speaking -- stood in line in front of the church. Many held small children, or scolded older ones for throwing the ubiquitous red landscaping rocks. They weren't here for a sermon, or even for the doughnuts. They came to take advantage of the church's economic relief program, which distributes food, gas cards, and small cash payments to help with utility bills. The church began the program last October, after it became clear that a profound shift had occurred in Surprise and the neighboring communities.

After a decade of riding high, the exurbs are in crisis. In California, Nevada and Arizona, thousands of foreclosed homes sit empty, weeds reclaim vacant lots in new subdivisions and big-box stores are shutting down. The local newspaper warns of roof rats infesting abandoned neighborhoods and mosquitoes colonizing unused swimming pools. Many observers believe that this is only a slump, albeit a deep one, and that the old patterns of growth will someday return. Others aren't so sure. It's possible, they say, that even after the national economic crisis subsides, the Western urban urge to expand rapidly and without limitation may have ended.

"I'm not sure that the era of sprawl is over," says Ed McMahon, senior fellow at the Urban Land Institute. "But the paradigm of unlimited suburban and exurban growth has definitely shifted."

The pattern of this remarkable growth, which was mimicked by other Western cities, was apparent from the beginning. As early as 1959, a Phoenix planning task force worried about the city's tendency to "leapfrog" outward, leaving huge tracts of land vacant close to its center -- a trend that has just become more pronounced. In spite of efforts to encourage infill development, most homebuilding has happened farther and farther out on the fringes, gobbling up desert land at alarming rates. Surprise, for example, was just a little town, separate from greater Phoenix, in 1990. Now it's been swallowed by sprawl.

Though this tendency to grow away from the city center, its jobs and its amenities seems counterintuitive, it makes sense from an economic and even a cultural viewpoint. Western cities typically have plenty of private land onto which to grow. If they run out, they develop ways to convert public land -- Las Vegas has grown onto once-federal land and Phoenix and Salt Lake City co-opt state land (see related story, page 14) -- much as early settlers homesteaded and staked mining claims on public land. Many of Phoenix's newcomers -- especially between 1970 and 2000 -- were retirees, so there was less need to build housing near employment. Most importantly, though, the farther you go from the city, the cheaper land tends to be.

And that's the only way to keep these exurban growth machines running. People are not flocking to Arizona's urban fringe to grow oranges or build computers; they're coming because it's cheap. In a 2004 survey by the Behavior Research Center of Arizona, 86 percent of respondents listed affordable housing as "somewhat" to "very important" factors in their decision to move to the Phoenix area. Just 67 percent rated jobs as important, and only 59 percent cited the weather.

Just because a place is relatively cheap doesn't make housing affordable, however. That brings us back to the Guerros. They wanted a nicer house than they could afford, so their lender offered a solution: An adjustable-rate mortgage. Their monthly payments were $2,700. Of course, the bank would jack up their rates after two years, but it didn't matter. With home values climbing steadily, they could refinance before the rate reset, pull out enough cash to buy a jetski or a new car, and keep their mortgage payments in check. In other words, the banks were creating affordable housing where it didn't really exist; with easy and tricky loans, they were creating purchasing power, or demand. Tens of thousands of such loans were issued in Arizona, and the major homebuilders even got into the game, offering financing in a manner more often associated with car manufacturers.

This artificially inflated demand did the trick. In just five years, Surprise gained another 50,000 people, and added more than 7,000 homes in 2005 alone. Maricopa County -- which contains the bulk of the greater Phoenix metro area -- grew faster than anywhere else in the country, and the Phoenix area issued more than 62,000 residential building permits. The economy responded: In 2006, Arizona's gross domestic product grew by 6.7 percent, compared to 3.1 percent for the nation as a whole. The construction industry provided 9 percent of all non-farm jobs in Arizona, making it by far the biggest employer in the state. Those jobs drew more people, who took out more loans to buy more houses, creating more demand … you get the picture.

Housing prices soared -- nearly doubling, on average, over two years -- to create almost instant wealth. Speculation was so rampant that it threw population estimates for a loop. Last year, with the bust in full swing, state and local officials discovered that their method of counting people -- by starting with 2000 census numbers and then estimating population using the number of houses built and sold -- didn't work. They had assumed an occupancy rate of 98 to 99 percent, when in fact at least one of every 10 new homes was sitting empty, even before the bust. A lot of people were making a lot of money. A lot of people would lose money, too.

By the time the Guerros' mortgage reset, this frenzied feedback loop was spiraling in on itself. Gas prices had soared, people couldn't pay their loans, and the housing bubble couldn't inflate itself anymore. Even as their home's value plummeted, the Guerros' loan payment increased by $1,100 a month. Bob tried to talk the lender into lowering the payments, but the bank wouldn't budge. He then paid a "mitigation company" some $3,000 to renegotiate the loan. "But everything they were doing I had already done," he says. "Basically, they did nothing for us except take our money."

It's the same crap been going on for 40 years in the West.

A bunch of people build houses and shopping centers for all the other people building houses and shopping centers until the cycle inevitably implodes since there isn't any real economy associated with it.

The whole thing runs in about 8 to 10 years.

Since the white people stopped having children in the 70's, the new fish are Mexicans. The developers should just move to Mexico and play the stupid game, but of course the Mexican government won't let them...that's their sandbox.

So the game continues here. Yawn....

It's the same crap been going on for 40 years in the West.

The whole thing runs in about 8 to 10 years.

So the game continues here. Yawn....

This game is played out. No more easy money for such schemes
For me America started downward in the 1980 when we started to run steady trade deficits and steady Federal budget deficits which have always been getting worse

Another big bump downward came after Russian/East European communism imploded
The free trade crowd and Wall Street financiers really came into their own
The USA no longer had to devote resources to defense against the Soviet Union.
The Cold War was over and same for the discipline of we had to fight the Cold War

NAFTA and GATT came after the USSR broke up
I doubt they would have passed before that breakup
When you take all US corporate profits Wall Street/finance has been responsible for an increasing share
Companies that manufacture on US soil have been less profitable
About 10 years ago Wall Mart became the largest US corporation knocking GM out of the top spot for good
Retailing became larger than manufacturing leaving us with is joke called the "consumer economy"

Since the white people stopped having children in the 70's, t

o-Cost of family formation has gone up and private schools become a necessity
o-- High real estate costs compared toi the 1950s and 1960s. Even the 1970s were OK
o- Lack of religious faith means marriage less stable
o- Too much junk food eating
o-- Birth control means men and women can fool around into their 30s before getting married and trying to have children

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