John Cowgill is standing in the rain on quiet Victory Avenue in Manteca, Calif., a gridlike town of 65,000 people located just outside of Stockton. A realtor with PMZ, the biggest real-estate firm in the northern San Joaquin Valley, he is responsible for the vacant and vandalized house standing behind him; inside, grafitti covers the walls, the banister is torn off a staircase, and glass shards from a broken chandelier peak out from the carpeting. Blocks away, the road comes to an abrupt end as rows of neatly planted crops replace rows of houses.
"Look at this house and the one over there. What's different?" Cowgill asks. At one house, the lawn is neatly trimmed and a small purple bicycle leans near the front door. At the other house, black iron bars are affixed to the door, a sight more commonly associated with the heart of the inner city than the outskirts of suburbia. Nearby, a rusty sports car sits in the driveway. "Manteca was a desirable place to live," he explains. "But this Wild West financing meant anybody could end up here. That's what this thing did. It scrambled communities."
The "thing," of course, was the real-estate roller coaster that came screeching to a spectacular halt after a half-decade cycle. As housing prices in the Bay Area skyrocketed, many moved to places like Manteca, spilling over the mountains into the northern San Joaquin Valley. They were drawn by the thousands of acres of cheaper suburban homes offering the promise of the good life for people willing to commute two or three hours. With acres of land to spare, swelling suburban developments, and a young skyrocketing population, the valley was the surest bet in the California housing market—until, starting in 2006, it wasn't.
Home prices tumbled by more than half, the largest declines in the country. Foreclosure rates in Stockton, Modesto, Merced, Bakersfield, Fresno, and Visalia soared to rank among the highest nationwide, a trend that continues to persist even after their housing markets have started to see signs of recovery. In Merced County, where a new state university brought a building frenzy with it, home prices plummeted by nearly three quarters, leaving the average home worth less today than it was in 2000—that is, if it existed in 2000. While the pace of foreclosures has slowed this summer, valley officials worry that it will spike back up once a government-imposed moratorium on repossessions is lifted. Across the valley, the unemployment rate is 15.4 percent. Many local officials are pushing for Washington to declare the region an economic disaster area, which would bring federal government assistance.
The irony in all these empty houses is the valley's rapidly growing population, which presumably needs a place to live. By 2050, it is expected to more than double to 7.9 million, accounting for 14 percent of the state's population, up from 6 percent today. More development was inevitable, researchers and officials agree; they just think it should have been managed differently. Though expanding, the valley's population is overwhelmingly young and poor, with a median age of less than 30 and poverty rates that rival Detroit and Appalachia. Big, sprawling, single-family suburban houses were the wrong fit. But the farmland was cheap, the zoning codes were lax, and, with Proposition 13—state legislation limiting property taxes—squeezing their budgets, city governments were eager to sign off on expansion. "Part of the sprawl problem we have is that [municipalities] are expanding housing to try to get a little more tax money to survive, and that's what's destroying the ag[riculture] and the open space and everything else," says Rollie Smith, the valley's federal HUD director. "But Prop 13 really makes it impossible for these places to do anything else." With no regional-planning mechanism to stop them, the borders of the valley's 62 cities sprawled outward.
The result was one of the most stunning changeovers of land use in our time. In a region where it's nearly impossible to hold a conversation without at least one mention of the valley's unique agricultural advantages, the rate at which farmland was converted to urban use doubled in a decade. It was paved over at a stunningly inefficient rate: an acre for every eight people, according to Edward Thompson at American Farmland Trust. The real problem is more technical, he says; because most of the valley's cities are located right on top of the most productive land, their rapid expansion was destroying the best of the best.
Valley leaders say they're on the case, putting together a blueprint for a green future, focusing on dense development and a renewed emphasis on city centers, and shifting toward a solar- and wind-energy-based economy. To that end, federal stimulus funds are helping. For the first round of funding, the valley picked up $617 million. For the second, they're hoping for $137 million. But their wish list is more than $10 billion and, as Mike Dozier, the regional point person for stimulus planning, puts it, getting money to the right places can be like "like nailing Jell-O to the wall." Smith, the HUD director, agrees. The valley's cities are small and poorly coordinated, he says, so they have more trouble jumping through bureaucratic hoops than well-developed metro areas. Plus, while stimulus funds are coming through for efforts that revitalize crumbling old neighborhoods in the valley's bigger cities, the smaller, newer ones are getting passed over. As for those exurbs of new, vacant foreclosured homes? Good luck.
To conservationists, that may be tough love, but it's the right place to invest the valley's money. Still, Smith says even the cities are not getting enough to revitalize their centers and lure people back from the suburbs. On that front, the state's raid on local general funds and redevelopment money is expected to have a particularly brutal effect. No one knows exactly how much the valley will lose in budget cuts, but all seem to agree: it will be far more than what's coming in through the federal stimulus. "The one nice thing about this crisis is that it stopped that crazy land grab that was going on outside the cities," Smith adds.
In Stockton, a builder named A. G. Spanos, which had previously specialized in the kind of big-box development that drew the ire of smart-growth advocates, recently announced plans for a $2 billion green housing project. The 1,800-acre development would include high-density housing, community gardens, and hundreds of acres of open space. It sounds as green as can be, but there's a catch: it would expand the city's footprint another mile and a half to the north. On the one hand, it's the most optimistic housing prospect the valley has seen in a long time. On the other, as a columnist at The Stockton Record put it, the project might be green, but it's still sprawl.
It's not hard to see why officials would be willing to overlook such a project's imperfections. In early July, HUD Secretary Shaun Donovan visited the valley to survey the empty lots and foreclosed homes that make up Merced's desolate subdivisions. After walking through the streets, he reportedly remarked, "I've been to New Orleans [after Hurricane Katrina] and to Cedar Rapids [Iowa] a year after the floods, and some of this reminds me of the same streets I walked down." It did not pass unnoticed that he was the second cabinet member flown in to survey the valley that week. One county to the south, Secretary of the Interior Ken Salazar had made similar comments after touring Fresno to see the fallout from the valley's water wars. In such an environment, it's understandable why any development would be greeted as a sign of hope.