Friday, April 24, 2009

U.S. road trip an eyeopener into true impact of recession

I’m newly back this week from a road trip through California, and had been curious before we left whether we’d see evidence of the economic downturn during our travels.
In fact, the signs of trouble were hard to miss. We were travelling routes that primarily took us through small towns, and it took but a glance at the lineup of grim legal notices in virtually every community’s local newspaper to grasp the impact the recession is having in the U.S.
The April 8 edition of the Pahrump Valley Times, for instance, featured close to five pages of legal notices, almost all of them involving trustee sales of houses in foreclosure. The legal language of the ads made things sound very dry and orderly, but it didn’t take much to imagine the distress of the overwhelmed, indebted homeowner at the heart of every one of them.
One California auction company handling foreclosures lists almost 1,400 homes for sale - and that’s just one company, in one state. Nationally, more than 800,000 households in the U.S. went into foreclosure in the first quarter of 2009. (, which is monitoring the issue, notes on its Web site that the real number will likely surpass a million by the time all the “latent foreclosure activity” is sorted out.)
Last month alone, some 341,000 U.S. households went into foreclosure - a 12 per cent jump over any month on record. In parts of Caifornia, Nevada, Utah, New Mexico and Idaho, as many as one in every 55 houses are now in foreclosure. A new industry has sprung up just to deal with empty houses, which are attracting looters and squatters - in some cases, the rousted families who have nowhere else to go.
Some of the routes we drove have been in trouble for a while, of course. The stretch of highway between Las Vegas and Hawthorne, Nev., was dotted with struggling towns on the brink of collapse 10 years ago when we travelled through there.
But some of those communities are now full-out ghost towns. At least one abandoned roadside motel - and more likely two or three - was for sale in every little community we passed through. Restaurants, country stores, car dealerships, mall spaces - even brothels - sat empty and boarded up.
We found permanent residents in every RV park we pulled into, and not the typical older couple enjoying a travel-filled retirement. In Oregon, we came across a two-car family living out of their fifth-wheel trailer at an RV park steps away from Interstate 5. They’d been living there for more than a year.
Housing is housing, mind you, and a fifth-wheel is better than nothing. But these are people living in RV parks not because they choose to, but because they have to. Meanwhile, the U.S. newspapers detail the stories of those other folks - the homeless, whose numbers are dramatically on the rise as well.
In Clark County, Nev. - the region that encompasses Las Vegas - almost 13,500 people are now living homeless. That’s nearly a 20 per cent increase from the last count two years ago. Two-thirds of those surveyed reported they’re homeless because they lost their job. Almost a fifth of the homeless are military veterans, primarily from the Vietnam, Persian Gulf and Afghanistan wars.
Child poverty is on the rise, too, and President Barack Obama’s promise to get that problem fixed by 2015 isn’t doing much to help the hungry kids and cash-strapped schools grappling with a worrying increase in families who qualify for subsidized meal programs.
In Portland, Ore., the schools in poor neighbourhoods continue to see the most demand, with more than 90 per cent of families in some parts of the city now dependent on subsidized meals for their children. But nine middle-class neighbourhoods are also reporting a rise in qualifying families.
On the bright side, property prices are truly astounding right now in the states we passed through. If you’ve ever fantasized about having a modest rancher somewhere in the interior of California or Nevada on an acre or two of land, these are dream days. Don’t bet the farm on our own real-estate market recovering any time soon when prices are this low in the U.S.
What’s it all going to mean for Canada? That’s the big question, with enough differences between our two countries that it’s hard to make any predictions with much certainty. But when your most important neighbour and trading partner is in this much trouble, I’d brace for a rough ride.

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