Knock down a house, get national attention.

Knock down a house, get national attention.

It was all so symbolic, or at least it was meant to be: brand new homes! with granite countertops! and whirlpool baths! and dual-pane windows! oh luxury! in a Southern California "suburb" (if you can call a place in the middle of the desert a "suburb") "near" chi-chi Los Angeles—if you can call sixty-five miles "near", and you probably can't even in distance-means-nothing Southern California, and we're not sure it's even that near—perfectly good, brand-spankin' new homes, I repeat, centrally located in la-la land, the American Dream in the land of dreams, knocked down because there were no takers!

As an object lesson in spent dreams, wasted homebuyer bells and whistles upgrades! and the wages of real estate hubris the story was too good for ABC News producers to pass up. (Perhaps the same discerning ABC News producers who not long ago brought us another object lesson in real estate hubris, skidding home prices in "upscale" Fairfield, California.) I guess that little flare-up in the Swat Valley, the one where the fate of western civilization supposedly hangs in the balance, really didn't merit another minute or two of coverage.

And a handful of flattened townhouses really is an object lesson, although not necessarily the one ABC News thought. For one thing, it's yet another object lesson that the late great building boom only temporarily suspended the first rule of real estate: location location location.

The principal industry of Victorville, California where the four completed and twelve partially-completed townhomes were leveled appears to be lining up mothballed airplanes wingtip-to-wingtip at nearby deactivated George Air Force Base.
The per capita income of Victorville's approximately 107,000 residents (up from 64,000 in 2000) is $14,454, a comfortable $3624 above the 2009 federal poverty level.
Victorville is best known as the former site of the Roy Rogers and Dale Evans Museum.
And, to be fair, it's not in the middle of the desert. No, of course not; it's at the southern edge of the Mojave Desert, and conveniently located thirty-four miles south of Barstow which, to my knowledge, has never been called "the Paris of the High Desert".
The official city Web site says Victorville is ninety-seven miles northeast of Los Angeles, which the Wikipedia entry shortens to eighty-one miles and the Associated Press in its coverage helpfully rounds down to "about 65 miles". If they knock down any more homes there, Victorville will be located right next to Beverley Hills.

For another—and let's not get too heavy—it's an object lesson in how Darwinian this thing called capitalism is. Build, buy or put your capital in a place where people live, not because of the location, employment opportunities or weather (which the city site cheerfully describes as "usually delightful...Temperatures range from below freezing up to 110 degrees in the summer") but because it's a "bargain" and, when the market inevitably turns, you're the first to get your oxygen cut off. Especially if you're a buyer, because most of the builders and investors took their profits and skedaddled. Whether you buy way out in Victorville or way out in the boondocks of Greater Phoenix or way out on the outskirts of the Greater Bay Area.

Way too much capital invested in a place with over-hyped business opportunities, the inevitable collapse with the locals left holding the bag, in this case a real estate development that became, not "suburban" housing, but an attractive nuisance: each Victorville story is a localized mini-object lesson in the kind of wild-eyed speculation that took down the economies of Far East nations (the "Asian flu") in the 1990s.

Darwinian also in the sense that under capitalism every rational economic decision is made, not to further the public interest, but to further individual and corporate self-interest which as Adam Smith assured us furthers the public interest. Why knock down perfectly good homes when we have the homeless? my wife asked. But as a moral failure of amoral capitalism this might be a non-starter. Because it's possible that even the homeless don't have a good reason to live in Victorville. Because, as the AT&T tech trouble-shooting Internet connection problems at my house astutely pointed out, "the homeless like to live near services".

Maybe homebuyers should too.

In a way this reminds me of the federal government paying American farmers to dump grain and destroy livestock in the 1930s while other Americans went hungry. Yes, plenty of people could have put that wasted food to good use, but the greater good—propping up declining farm values inflated during World War I by unusually high demand for American food exports—seemingly required a dire course of treatment. Create a food shortage that raises prices in a key economic sector (and a lot more people depended on farm income then than do now) and farmers get back on their feet, banks stop foreclosing on them (or failing), credit reappears, the economy snaps out of its tailspin, jobs pop up and few or fewer go hungry.

But this time, of course, it's different. This time it's just one bank bailing from a project it should in hindsight have never financed (although that booming 67 percent increase in population in less than a decade would have made every Victorville project look viable in 2007), and it's not farm prices now but home prices that could use a little help and...uh...what else is different? Oh yeah, I know: this time they haven't done a proper job. Because destroying one unneeded development while so many others still stand seems like an object lesson in too little, too late.