The Southwest's population and housing booms bite the dust

  • Empty lots make up half of a desert subdivision near Phoenix, Arizona.

    Getty , Pete Mcbride

If you want to see the dried-up husk of the New West's latest incarnation, just go to Maricopa, Ariz., and visit one of the half-built suburbs on its fringe. You'll see earth scraped bare and a tumbleweed or two, and even a few ghosts: The phantoms of streets mapped but never built, lots subdivided but never occupied, homeownership dreams murdered by foreclosure.

Just five years ago, an Arizona State University report predicted that by 2040, Maricopa and the surrounding area would become the heart of a 10 million-person, 100-mile-long megalopolis. The Sun Corridor from Nogales to Prescott would become the shining manifestation of the growth that had swept not just southern Arizona, but Las Vegas, Nev., St. George, Utah, and plenty of other Western places since the 1990s.

Today, the Sun Corridor seems like a sci-fi fantasy gone wrong. Pinal County, which includes Maricopa and dozens of other towns in the desert between Phoenix and Tucson, is now covered with more than 600,000 lots that have been approved for development but remain empty, along with hundreds of foreclosed homes. Recently released U.S. Census Bureau numbers, along with a handful of new economic analyses, indicate that the hard times were worse than anyone thought, and may be far from over. Even the most optimistic growth-machine boosters see this slump not as a mere blip or passing phase, but as a "lost decade" at the very least -- perhaps a redefining moment in the region's history.

The New West dream, like the Old West visions that preceded it, sprang from the idea of limitless abundance. Clean air, scenery, recreation, cheap land and housing fueled the latest boom. Between 1995 and 2008, Arizona gained 2 million people, while Nevada and Colorado each added more than 1 million.

Rising at an even faster rate was the number of houses; in Arizona, Nevada and parts of Utah, housing units sprouted as much as 5 percent faster than the population grew. Housing prices more than doubled in some places, fueled mostly by easy access to mortgages. That, in turn, spurred more building, creating thousands of construction jobs. Homeowners used their soaring equity to add backyard pools, buy cars or boats and otherwise fuel the economy. This tail-devouring organism, in which growth begat yet more growth, came to define the New West's economy and culture.

Many doomsayers figured that climate change and lack of water -- a recent U.S. Geological Survey report found that since the 1940s, Arizona had depleted its groundwater resources by the equivalent of three full Lake Powells -- would eventually bring the Sun Corridor to its senses. Yet almost no one believed that the boom would end.

The water kept flowing through the West's convoluted plumbing, but the easy credit did not. In 2006, the growth monster was smothered by its own corpulent debt. Foreclosures began and housing prices plummeted. Economists were initially sanguine: The West's economies busted in the mid-1980s but recovered nicely. As late as 2008, economists at the University of Arizona's Eller College of Management predicted that breakneck growth would kick in again by mid-2010. Instead, the bust continues, and by nearly every measure it has proven more severe than any in the past.

A September report from the Brookings Institution paints a grim picture, noting that the Intermountain West's housing and job markets are worse than the rest of the nation. Even places like Denver, Colo., and Ogden, Utah, which have weathered the recession relatively well, "have stagnated in the worst economic slump since the Great Depression."

As the world's population hits 7 billion, the once-fastest-growing parts of the U.S. are at a standstill. Clark County, Nev., home to Las Vegas, lost around 30,000 people last year, and the state demographer expects that growth rates will not exceed 1 percent per year over the next two decades. Instead of the 7.2 million people forecast a few years ago, Arizona has about 6.4 million.

In their 2011-2012 Economic Outlook for Arizona, Eller College economists note the "enormous inventory of vacant housing," which would take years to fill even at boom-time population growth rates. The housing glut is evident in Maricopa, where, beyond the empty lots, you'll find dozens of three- or four-bedroom homes, most only five or six years old, listed for prices -- $60,000-$70,000 -- that wouldn't have bought you an empty lot a few years back. More than half the houses in Nevada and Arizona are "upside down," meaning their value is lower than what is owed on them, and even the most optimistic forecasts say that prices could continue to fall for the next two years.

It's enough to get people thinking about the once-unthinkable: Maybe the new New West won't be fueled by growth after all. Solar installations -- three or four are now planned for Pinal County -- might cover those empty subdivisions, or perhaps they'll be returned to farmland or mined or drilled for whatever valuable minerals lie underneath. Grady Gammage, real estate attorney, developer and the chief author of the original Sun Corridor Megapolitan report, recently made a cryptic statement that implies that even he sees a different future.

"This is not to say that cities are destined to just keep growing. They can shrink, too," wrote Gammage, responding to charges that Phoenix is one of the least sustainable cities in the nation. "Once proud and flourishing urban centers, such as Babylon and even Venice, have reached points of economic obsolescence and declined, often precipitously."

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