The housing crisis

The sign proclaimed "House for Sale (bank owned)." The construction looked recent and maybe a little ticky tacky but the place was obviously abandoned, with lawn, landscaping shrubs and trees dying from drought. A house, or three, down the block was not even completed but abandoned mid-construction. The current housing financial crisis is vividly on display in and around Merced, California.

It was enlightening to drive through the new but blighted fields of dreams in the town that used to be our home some 35 years ago. Living in Merced, an Ag community much like McCook plus being a bedroom community for nearby Castle AFB, reminded me at the time ever so much of the community where I grew up. It was a little larger, the population was about 50,000 souls at the time, but a neighbor next door farmed, some 800+ acres of rice, and another across the street and near the end of the cul-de-sac raised irrigated corn for Frito Lay Corp. We spent three, too short, years there while I taught pilots to fly the KC-135, the U.S. Air Force's premier tanker (and it still is) at the time.

Merced is located in the middle of the huge San Joaquin Valley a short drive west of beautiful Yosemite National Park. The soil is sandy and irrigation water ample to raise about any crop imaginable. I recollect large fields of cotton, wheat, barley, oats, corn, rice, alfalfa, tomatoes, bell peppers, onions, garlic, melons, peaches, figs, almonds, pecans, English Walnuts, grapes: table, wine and raisin, olives, and currently noticed new ones including, artichokes, pistachios and pomegranates.

Intermixed with the crops are livestock pasture supporting beef operations dairies and even fish farms. In the San Joaquin the growing season is long enough to produce six cuttings of alfalfa all of which can be put up with no rain bleaching. It is a wondrous place to farm even though it takes about 36 acre inches of irrigation water a year to raise corn vs. the 18 acre inches we use in the Republican Valley. Summer rain is nonexistent.

Not only is the San Joaquin a great place to farm, it is a great place to live. From Merced it is only about an hour drive to be in the mountains at Yosemite or a couple hours to the Pacific Ocean and a half hour more to San Francisco on either of two interstate highways headed that way. LA is a little further, about four hours to the South. Possibly that was the great incentive for investors to develop large new housing projects in and around Merced. The current population, at least the last time they counted, is about 80,000 people.

I asked my host, Jim Glidden, what happened to the people that purchased and then abandoned all the new housing.

Good question! Merced geared up and handled well the slight increase in homeless with an enlarged shelter and feeding programs. A couple of panhandlers were still evident, but those are informally organized and work in shifts -- probably beat work! At one time, there were four speed boat manufactures in Merced, Malibu being the largest, but now two have closed their doors and the remaining two survivors are barely producing. Not evident are the plumbers, electricians, and tradesmen who performed their work in new houses but were left holding the bag when building companies and developers declared bankruptcy and departed the area.

The speculators from San Jose and other affluent areas simply abandoned their investments. The poor souls who purchased a home to live in are emotionally as well as financially strapped and either leave to rent if their job is still available or just hang on by the skin of their teeth.

When one economic engine in a community is greatly disrupted it affects the whole community. We in southwestern Nebraska saw the same thing happen when agriculture contracted and forced oh-so-many small farmers out of business. At least in Nebraska, the same amount of acres is still farmed, creating a market for fertilizer, herbicides and pesticides, that sort of thing but few tractors or combines are needed and machinery dealers suffer. Most of the broke farmers had marketable skills and now manufacture center pivots, industrial hose or a hundred other skilled jobs.

Overall I think the current housing crisis affects more lives than did changes to agriculture. For example, one the reasons that the boat manufacturing in Merced retracted was that most of the "go fast" boats, big SUV's, sports cars or you name it, were purchased by people who had financed a house and then seeing new found equity, in an ever expanding housing market, took out a second mortgage to buy the toys. They, and their lenders, evidently planned on the value of the house increasing enough to cover all their debts.

Didn't happen, and now they are upside down, with more debt to pay interest on than their house will ever be worth. Then to have a derelict unfinished house next door or two or three down the block, what will that do to your value?

Taxes go on, utilities now with rates inflated to cover new construction that will never pay for itself, oh the problems compound.

It was interesting to take a close look at others much ballyhooed problem but for sure we don't want something similar in our future. Hopefully investors and home buyers in the McCook area will display better common sense and keep from contracting debt that they can never pay off! It will be good to be home.

That is the way I see it.