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I
F YOU DRIVE NORTH FROM
T
AMPA ALONG
I-75
FOR ABOUT TWENTY-FIVE
miles, then take the off-ramp onto Wesley Chapel Boulevard and drive east a few miles more, you’ll eventually come upon Curley Road, up on the left. And if you take that left, you’ll see before you a clean divide between suburb and country. On the right side of the road lie vast acres of cow pastures, and beyond them an electrical power station. On the left lie subdivisions, neatly set, one after another.

The last and largest of them, before you hit the orange groves, is Bridgewater, a planned community of some 760 houses built mostly in 2005 and 2006, at the height of the housing boom. It’s a nice if generic-looking community of McMansions and somewhat smaller homes. Many of the houses back up onto one of the development’s several artificial lakes. All are painted in neutral, inoffensive colors. Visually, the neighborhood is indistinguishable from innumerable other exurban communities that have promised the trappings of affluence to millions of middle-class families, and that have become, arguably, the physical representation of the modern American Dream.

Drive around a bit, though, and you’ll quickly notice many of the dissonant images that now appear in exurban neighborhoods nationwide. More driveways sit empty than you’d expect, and the streets are curiously quiet, even by suburban standards. In other driveways, there are too many cars altogether—jumbles of pickups
and old Camrys; more cars, seemingly, than bedrooms in the house behind them. On some streets, most of the houses are for sale.

Since the recession began, about 80 percent of Bridgewater’s houses have been in foreclosure at one time or another. Midway through 2010, nearly half were occupied by renters. Sixty or seventy were vacant.

On a Friday afternoon in August 2010, I chatted with an attractive young couple I saw washing their car in front of their house on one of the subdevelopment’s many identical streets. They’d been living there for the past two years, they told me, because the rent couldn’t be beat. But that was the only reason. “It’s not what you’d expect by just looking at it,” said the man, a leanly muscled police trooper with a buzz cut. “The people here are the kind of people I encounter in my line of work,” he said, pausing. “People I arrest.” Half the houses on the street were vacant—“that one, that one, the one over there”—and he didn’t count any friends among those neighbors he had. He kept his police car parked prominently in the driveway of one of those vacant houses, to scare off undesirables.

Mark Spector is one of Bridgewater’s original homeowners and now the president of its homeowners association. I sat down with him in the kitchen of his spacious, six-bedroom house that same day, as his seven-year-old daughter, Chloe, played in the living room, and he told me the story of the community. Spector had bought his house for $350,000 in 2005, as the subdevelopment was still being built out. He and his wife—who both have a graduate degree—had moved from California to be closer to her family, and he’d taken a job in business development at a large health-care company. When we talked, he was forty-one, and behind his wire-rimmed glasses, more often than not, he wore an expression of weary bemusement, colored by a deeper bitterness, as he described the past five years.

As their house was being built, Spector said, he tracked other neighborhood house sales with no little excitement—every month the prices seemed to go up by $5,000 or more. At the peak of the market, about a year after he’d moved in, houses with floor plans
like his were selling for $550,000. By then he was enjoying the new swimming pool he’d put in, financed by a $50,000 home-equity loan.

Spector knew things were going to go wrong, he told me, when he began to see contractors who’d been working in the neighborhood snapping up houses, planning to flip them. But he wasn’t prepared for how far wrong they’d go, or how quickly. In fact, more than half of Bridgewater’s home buyers were speculative investors. When the market turned down and they couldn’t sell profitably, many went into foreclosure almost immediately. Overcapacity turned out to be so severe—not just in Bridgewater, but everywhere in the region—that even finding steady renters proved difficult. Section 8 voucher recipients became desirable, because their rent payments were assured.

As the neighborhood became more transient, its character began to change. People in the midst of foreclosure stopped keeping their yards carefully; some stripped their houses of appliances and electrical fixtures as they left. Unkempt lawns and visible disrepair became more widespread as new renters and other residents saw that the neighborhood standard of upkeep was not always high. As the months went by, vacant houses, low rental prices, and budding disorder began to attract criminals, Spector told me, and for a time drug sales became a problem; a Miami-based gang briefly established an outpost in the neighborhood and tagged its streets with graffiti. On at least a couple of occasions, he said, gunfire was exchanged. Through it all, people continued to wash in and out of the community, and they still do today; on the first and last day of each month, a “parade of U-Hauls” goes up and down Bridgegate Drive.

“My daughter is always telling me, ‘I have a new classmate’ ” at school, Spector said. But then the classmate will disappear a few months later. No small number of the neighborhood’s renters, he said, will pay the deposit and the first month’s rent and then just wait to be evicted, which can take several months. More than half the kids at Chloe’s elementary school now qualify for the free or
reduced-price lunch program, Spector told me, and he worries that the school’s quality, which was excellent when he moved in, may be declining. “I understand that people are down on their luck,” he said, “but this isn’t the neighborhood that I moved into.… It’s never going to recover to what it was.”

The waves of foreclosure buffeting Bridgewater seem unending, Spector said. The investors defaulted first, followed by ordinary homeowners who’d been in over their heads from the day of their closing. The latest wave was washing out people who’d lost their jobs in the recession and seen once-manageable payments become impossible. “Every single time you think you’ve hit some type of stability, the next round comes.”

Spector’s house was most recently assessed at $179,000, though he’s not sure he could sell it for that much. “We’re completely trapped,” he said. “There’s no way I can move anywhere unless I’m coming to the table with more than $200,000.” And besides, he adds, “where would we move? Wherever you look, it’s the same, unless you go to one of the really older communities.” Spector’s house in Bridgewater isn’t his first; he and his wife had previously owned a home, and had reinvested part of the proceeds into this one. “To think that we would have to save up just for a deposit now,” he says. “It’s like starting from scratch.”

S
INCE THE
1940s
, the story of the American middle class has been tightly intertwined with that of America’s suburbs. Middle-class life is, to a large extent, measured by housing, and the purchase of a house in the suburbs is, for many families, an emblem of achievement—signifying fully-adult status, economic security, and some measure of prosperity. And of course a home is by far the largest store of wealth for most families as well—a savings account, rainy-day fund, and retirement asset all rolled into one.

As middle-class incomes have faltered over the past two decades or more, housing has become ever more central to the achievement
and maintenance of middle-class life. By the middle of the aughts, many Americans had come to view their house not just as a store of wealth, but as an engine of it, one that seemed to promise the upward mobility and increasing material comfort that flat salaries did not. From 2000 through 2006,
real home prices rose by almost 90 percent nationally; in particularly effervescent markets such as Las Vegas, Phoenix, Tampa, and Miami, values more than doubled.
Home buyers—more than 50 million of them over that same span—chased those returns eagerly, spending 34 percent of their disposable income on housing, on average, by 2006. Relaxed credit standards both expanded the pool of buyers and allowed them to put little money down, enabling bigger and more-leveraged home purchases. In 2005,
nearly one in four new mortgages was an interest-only adjustable-rate loan. In 2006,
20 percent of all new mortgages were subprime, up fourfold since 1994.

Clearly,
this kind of appreciation couldn’t go on forever—as the economist Robert Shiller has shown, once you account for inflation and home improvements, housing has never been a fast-appreciating asset over the long haul. From 1890 through 2004, U.S. house prices rose just 0.4 percent per year on average, with these factors taken into account. This stands to reason: land remains plentiful in the United States, and the cost of construction materials hasn’t risen greatly—if anything, houses are cheaper and faster to build now than they’ve ever been.

But for almost a decade,
typical families saw the value of their home go up by $10,000 or $15,000 a year (more still at the peak).
Many cashed out at least part of the increase to fund renovations or annual vacations or new cars. According to the Federal Deposit Insurance Corporation, the value of all outstanding home-equity loans more than doubled between 1998 and 2008, to more than $650 billion. As of 2007, according to the Census Bureau,
more than 12 million owner-occupied houses (about one in six) had second or third mortgages on them; another 2 million homeowners had refinanced their mortgage primarily to get cash back.

With the crash, many families have seen their house transformed in a blink from a sort of magical ATM to a heavy burden.
Nationwide, housing values fell by about 31 percent from their peak in 2006 to the end of 2010. In Las Vegas, Phoenix, and Tampa, they fell by 58 percent, 55 percent, and 45 percent, respectively. And we still may not have reached the bottom; at the beginning of 2011, home values were still more than 20 percent higher than they were in 2000, after adjusting for inflation. According to the Census Bureau,
the total housing vacancy rate in 2009—more than 10 percent, including rental properties that had been vacant for a full year—was higher than it had been since 1965, when the bureau first started tracking that data.

At the beginning of 2011,
roughly one in four homeowners was underwater—their house was worth less than the principal still outstanding on their mortgage. (In Arizona and Florida, that number was one in two; in Nevada, two in three.) Roughly one in seven was delinquent on a mortgage. A small fraction of homeowners—currently sitting in the long purgatory between foreclosure and eviction—have extra cash to spend or save, albeit temporarily, because they are paying nothing for the roof over their heads.
But a larger number have been struggling to make house payments. As Harvard University’s Joint Center for Housing Studies reported in June 2010, “Despite falling home prices, loan modifications, and softening rents, the downturn did not reduce the number of households spending half or more of their income on housing—18.6 million in 2008. Instead, the share with such severe housing cost burdens climbed to a new height.”

“
Disillusionment is the appropriate word for my current condition,” wrote a reader of Andrew Sullivan’s in Sullivan’s recurring blog feature “The View from Your Recession.” The man, a software engineer who’d immigrated from Nigeria and was living in the Midwest, said he’d spent years eating ramen noodles and keeping the thermostat down in the winter so that he could save aggressively, and he’d put the lion’s share of his savings into his house and other real-estate
properties, which he’d bought and held. “If I had been profligate,” he wrote, “at least I would have the memories. It’s hard to muster the discipline to save again. It was difficult (horrendous even) to work an average of 75 hours a week for over a decade. It stings to realize that it was all for naught.”

T
HE PROBLEM NOW
facing many middle-income families—especially young, striving families who bought into new communities in recent years—is not only that their biggest financial asset has become a liability (though that problem is severe). It’s that everything they thought they were buying along with their house—good schools, a good neighborhood, the good life—is also now in question. The suburban idyll, in many places, appears to be vanishing.

For many years, the housing bubble papered over the stagnation of middle-class incomes. But it also changed the geography of middle-class living, in ways that look unhealthy today. As the bubble inflated, first-time buyers found it harder to get in on the action—particularly in high-priced city-regions with diverse and thriving economies like San Francisco, Los Angeles, New York, and Boston. But of course, with most people’s salaries and wages going nowhere, getting in on the game was also becoming more urgent. Within city-regions, that fueled explosive growth in faraway exurbs. Nationally, it prompted a helter-skelter rush into lower-priced but fast-appreciating metro areas like Orlando, Tampa, Phoenix, and Las Vegas—the same places now suffering the worst effects of the crash.

This pattern of middle-class migration was not new; both sprawl and the Sun Belt had been growing for decades. But the bubble pushed that growth further and faster. Phoenix grew from just under 1 million people in 1990 to more than 1.5 million in 2007. One of its suburbs, Mesa, is now larger than Pittsburgh.

The economic boom in many of these cities, writes Richard Florida, was, to an uncommon degree, “propelled by housing appreciation: as prices rose, more people moved in, seeking inexpensive
lifestyles and the opportunity to get in on the real-estate market where it was rising, but still affordable. Local homeowners pumped more and more capital out of their houses as well,” and into the local economy. “Cities grew, tax coffers filled, spending continued, more people arrived. Yet the boom itself neither followed nor resulted in the development of sustainable, scalable, highly productive industries or services. It was fueled and funded by housing, and housing was its primary product. Whole cities and metro regions became giant Ponzi schemes.”