The Unwinding

by George Packer

  A strain of thought said that urban life was un-American, and Van Sickler felt its presence in the growth machine out in Hillsborough County. The corporate-built houses in the subdivisions looked like bunkers, with tiny windows, no breezeways or courtyards to suit the climate, air conditioners running all the time in cavelike darkness. Inside, families sat in their carpeted living room before a large-screen plasma TV, with the blinds drawn against the sunlight. Outside, the long, long streets of identical houses without shade gave people no reason to want to walk anywhere, so they went from car to driveway to house and never got to know their neighbors. They were retreating from the world, and their isolation was deepened by a pervasive paranoia. Signs advertising accident attorneys, fast cash for houses, and get-rich-quick schemes were everywhere, and auto insurance was higher in Florida than elsewhere—insurers called it “a fraudulent state.” Florida drew the transient and rootless on the eternal promise of a second chance, with more than its share of scammers and con men. So who was to say the guy living next door wasn’t one of them?

  A subdivision like Carriage Pointe was Jane Jacobs’s vision of hell.

  In 2006, Van Sickler wrote a story about the people buying houses around Tampa. A lot of them lived in other places, and when he tracked them down by phone, he would ask, “Are you living in the home? Oh, is it a vacation home? Why would you be vacationing in Ruskin—it’s not a vacation destination.” It turned out that at least half the sales were going to investors—a huge number. The whole concept of home ownership had been warped beyond recognition. These houses were disposable commodities. That was what drove the demand.

  Van Sickler never quite fit in in Tampa. He was tall and pale, with strawberry blond hair, and he wore dress slacks and long-sleeved shirts. His voice sounded a little formal, like an old-fashioned radio reporter’s, and his midwestern earnestness made him awkward amid the glad-handing of the Sunshine State, which was the other side of its fraudulence. He was especially earnest about his job. An investigative reporter had to be an idealist—Van Sickler didn’t buy the idea that journalists were cynical. The press didn’t help itself or its readers when a story gave both sides and left it at that, because some things were objectively true and reporters should say so.

  Van Sickler sometimes feared that his style as a reporter was too abrupt and prosecutorial. Mark Sharpe, a Republican county commissioner, would get a call from Van Sickler about campaign donations from a developer and know immediately that there was going to be trouble. The questions would begin, innocent-sounding at first, simple matters of fact, but they would keep coming, one question after another, and Van Sickler remembered everything that Sharpe had ever told him, and eventually the reporter would spring his trap, arrive at the question that Sharpe had seen coming from the start: “If this guy’s a major contributor, do you think there was anything wrong with your vote to waive impact fees?”

  Van Sickler believed that there were two kinds of journalists—the ones who told stories, and the ones who uncovered wrongdoing. He was definitely the latter. But the only person he ever took down was Sonny Kim.

  In the spring of 2006, Van Sickler began to hear about a man named Kenny Rushing. He was a black real-estate salesman, which was unusual in Tampa. His name and face appeared on billboards and TV ads as the caped superhero Captain Save-a-House, a play on the rap song “Captain Save-a-Hoe.” He held jam-packed tent shows, where he showed up in a white Bentley and a Kangol cap, trailed by a convoy of Hummers festooned with his picture. He preached that the city’s black poor could get a piece of the housing action just like everyone else, by buying up distressed properties and selling them for huge profits. “It’s time to do for self,” Rushing told an audience in Ybor City. “Black folks dominate what? Sports and entertainment. I want them to say that blacks dominate real estate, which has produced more millionaires than anything else I know.”

  It was all about empowerment, civil rights, and getting rich. Rushing had been a drug dealer as a teenager in Des Moines and done four years in a Florida prison. He made his story part of the motivational pitch, telling young dealers that they, too, should turn their smarts to the legitimate pursuit of flipping, enriching themselves while benefiting black homeowners who needed financial relief. “It was Carnegie crossed with Jay-Z,” Van Sickler said. “The thing about the economy in Florida back during the boom years—it was hardly booming. It was only booming in one sector, and that was real estate. If you weren’t on the inside, you were struggling just like everybody else.”

  Van Sickler began looking into Kenny Rushing. In his self-presentation he was just a low-level drug dealer, but in fact he had been a major crack distributor for the Crips. His stories of Golden Gloves titles were fabrications. And Captain Save-a-House turned out to be exactly the kind of predator that he denounced at his sold-out seminars. He had persuaded a seventy-three-year-old black grandmother in an aging, mixed neighborhood called Tampa Heights to let him take her dilapidated house off her hands for $20,000. The woman owed almost all of it on a loan from the city and ended up with just $1,729. Three weeks later, Rushing sold the house to an investment trust called Land Assemble for $70,000.

  Van Sickler asked Rushing about the deal.

  “If I had known the house was worth seventy thousand dollars I would have paid her a lot more,” Rushing said, “sixty thousand easy. Don’t slant this, I’m not taking advantage of a woman.”

  Van Sickler, in prosecutorial mode, asked if Captain Save-a-House would give her some of his profit.

  “I’m not about to say, ‘Here you go, here’s all I made on the property.’”

  In four years, Rushing and his partners had cleared well over a million dollars. Fifteen of the deals were in Tampa Heights, which, not coincidentally, was the planned site for a huge five-hundred-million-dollar redevelopment project, called Heights of Tampa, with nineteen hundred upscale condos and townhouses. Rushing was acting as the front man for two of Tampa’s most powerful developers. He minimized the relationship, and the developers denied knowing him.

  Van Sickler was intrigued by the connection between a former crack dealer and the city’s elite, and he published his story in May. It introduced him to the vast underside of the hottest real estate market in the country. A broker he talked to while reporting the story passed along a tip: “If you think Kenny is something, you should check out Sonny Kim.”

  By the time Van Sickler caught up with Sonny Kim, the music had stopped.

  * * *

  Some people in the Florida real estate business could identify the precise moment when it happened. For Marc Joseph, a broker in Fort Myers and Cape Coral—the eye of the madness—there was a week in December 2005, with the average price per unit at a peak of $322,000, when the phone didn’t ring as much as usual. It felt like a car slowing to a halt as all the air went out of the tires. Others timed the moment a few months before or after that and compared it to the lights being switched off. At some point in late 2005 or early 2006, with the housing market at its dizzying mid-decade height, speculators suddenly lost confidence, the faith that kept Florida aloft gave way, and the economy plummeted like a Looney Tunes character who, suspended in midair, looks down. Prices did what borrowers, lenders, flippers, Wall Street traders betting long, credit default swap desks, Fannie Mae, Asian bankers looking for 8 percent, antic boosters on CNBC, and Alan Greenspan somehow never imagined possible: they started to decline.

  It took a year or two for the effects to be seen across the landscape of boomburgs, brokers’ offices, construction sites, and retail malls. In early 2007, an official of Allied Van Lines reported to the Florida Chamber of Commerce in Tallahassee that the company was moving more people out of the state than in. Between 2007 and 2008, the number of electrical hookups in Florida decreased for the first time in the forty years that records had been kept. And for the first time ever, the state’s net flow of immigration, the engine of the growth machine, dwindled to zero.

  Lumberyards sold off equipment
. Car dealerships laid off salesmen. Developers filed for bankruptcy, and their wives filed for divorce. By early 2008, the concrete company where Ron Formosa worked in Cape Coral started getting rid of guys. First Ron saw his hours cut in half, then he lost his job. At the same time, adjustable interest rates went up and balloon payments on subprime loans came due, which meant that borrowers like the Formosas, who were already watching their incomes and property values melt away, had an even harder time keeping up on their mortgages. Ron and Jennifer filed for bankruptcy, but they couldn’t afford the fourteen-hundred-dollar fee, even after Ron found a job working for a locksmith, making nine dollars an hour changing the locks on foreclosed houses. The Formosas went a full year without making a mortgage payment before the bank put an ugly yellow auction sticker on their door. They found a nearby rental and vacated the house. Jennifer vowed to save her money next time instead of spending it. “I don’t think I’ll ever want to buy a house again,” she said. This was how the foreclosure epidemic began.

  On State Road 54 in Pasco County, the developer stopped work on Country Walk midproject, leaving behind streets whose pavement ended in wiregrass after a few feet, streets with signs and lights but no houses, streets with houses but no occupants. The promised tennis pavilion and beach volleyball court hadn’t materialized. In a front yard, there was a FOR SALE sign next to a collapsed inflatable Santa Claus. Three yellowing copies of The Tampa Tribune lay on the front pavers at 30750 Pumpkin Ridge Drive, with trash in the kitchen and the fridge door open, and a FOR SALE BY OWNER sign in the yard. Half or two-thirds of the houses were vacant, but the residents who hung on in Country Walk parked their cars in the empty driveways and kept the neighboring lawns of San Augustine grass mowed to avoid an appearance of decline. On the more forsaken blocks the change was obvious—six inches of grass, weeds in the driveway, copper wiring ripped from the air-conditioner boxes, a rash of green mold spreading across a beige stucco wall, a VACANT or ABANDONED notice tacked to a front door. But the collapse of the Ponzi scheme was unspectacular, with no demolished factories or abandoned farms. The ghost subdivisions were pretty, in a way. Under the brilliant aquamarine sky the houses looked like perfect cardboard cutouts, the surfaces smooth and regular, the blinds drawn, the landscape almost untainted by human life.

  The prices that had rocketed skyward dropped just as fast to earth. Up State Road 54 from Country Walk, Bunny’s house in Twin Lakes, which had gone from $114,000 to $280,000 in six years, fell to $160,000 in two years. Some of the houses on Bunny’s street had been owned by flippers, and some had been owned by people who could no longer afford to live in them, but in both cases nobody was there, and on a weekend afternoon Bunny from Utopia Parkway was watering her lawn, in hip-hugging Capri jeans, a sleeveless top, and silvery-green eye shadow, without another soul in sight.

  Usha Patel’s Comfort Inn earned a million dollars in her first year, eight hundred thousand her second. She found Americans to be hopeless employees. They lived day to day, collecting their paycheck on Friday, clubbing and partying even if they had kids, skipping work Monday, showing up late Tuesday, refusing some tasks because their pay was too low, always full of complaints and excuses—“My son took my keys.” They might give her a week of hard work and then demand a vacation. Or a cigarette break every ten minutes, even if they didn’t smoke. When Usha talked about American workers, her nose scrunched up and her mouth turned down and her eyes narrowed as if the subject was physically unpleasant. They were spoiled, as she had once been spoiled, and it was by all the foreigners doing cheap labor. The only good people she ever hired were immigrants like her, who were trustworthy and willing to work hard for low pay—a night manager from the Islands, a guy from India, the Spanish housekeepers.

  But her optimism about the country was undimmed. It was the land of opportunity for everyone. “I love America,” she said. “If any foreigner can come and get success, the people living here don’t want to work.” She liked America’s rules and laws, the lack of corruption, the fact that anyone could get justice. Her son had become a young businessman—he owned his own computer shop in a Tampa strip mall and drove a BMW and lived on the twenty-sixth floor of a condo tower downtown. Compared to India, America was a dream.

  In her third year, 2007, Usha’s earnings dropped to half a million dollars, with occupancy at just 25 percent—you needed 50 percent to survive. Two things conspired against her motel. The first was the housing crash, which was beginning to bring down the wider economy (she blamed it on strict border enforcement, which kept out all the good foreign workers). The second was construction work on a new shopping mall along the access road between her Comfort Inn and I-75, which began around the same time as the downturn. The work closed her exit at night and took away her highway sign, which killed her business (the mall was never finished). She started having trouble making her twenty-five-thousand-a-month payments. Her son helped out, but before long she was falling behind.

  Mike Ross got caught by the collapse in the middle of a family crisis. He asked a court to grant him custody of his grandchildren because his daughter and her boyfriend in St. Petersburg were abusing them—the boyfriend threw the one with cerebral palsy into a swimming pool and laughed, Mike said. By the time Mike and his wife, who was on disability from an auto accident, got custody, they were two years behind on the renovation of their old farmhouse in Georgia. Before they could finish, the market turned, and their $180,000 property ended up selling for $110,000. Mike’s former clients in the yacht business advised them to move to Northern California, far away from the abusers, and flip houses there, but when they arrived in Vacaville with the grandkids, the economy was tanking and there was no work, not even in gas stations or 7-Elevens. Plus the financing rules had all changed, so it was impossible to get a loan and start flipping. The move cost them fifty thousand dollars, half their savings. After six months in California they moved back east, to a nice little town outside Raleigh, sort of like Vacaville with trees, but North Carolina was California all over again, no jobs in construction, auto body work, or anything else Mike tried. They were running out of money, and Mike began to fear they’d end up homeless. There was no choice but to move with the grandkids back to St. Petersburg, where the daughter and her boyfriend still lived.

  Mike tried to get work with his old customers in the yacht business, but they were all well cared for by the repairmen he’d turned them over to. He hung around the Pasadena Yacht and Country Club for a while but didn’t get a single call. That life was over. He borrowed money from a former client to put his family into a rental apartment in a ghettoish neighborhood, where the kids in the parking lot picked on the grandson with cerebral palsy. They were living on food stamps, his wife’s disability, the grandson’s SSI, and charity. Mike was deteriorating psychologically, his mind racing three hundred miles an hour—he was afraid of homelessness, suicide, the loony bin, running into the boyfriend, who didn’t know they were back in St. Petersburg—afraid all the time, making up stories in his mind about what could happen to him and then finding that the things did happen. And he had once been so calm, so steady, varnishing yachts in the marina under a blue sky. His torso ballooned, and though he could still laugh at himself, his eyes stared out through rimless glasses in medicated sadness. He was on painkillers for back pain and Xanax for anxiety, and once, tired of it all, wanting to put his load down and sleep, he took thirty Xanax and four Vicodin and fell into a two-day coma.

  “The economy triggered it all,” he said. “It just ripped me apart, it took away my will to live. That’s the way I see it.”

  They locked Mike up in the loony bin for three days. When he got out he threw himself on the mercy of a Tampa crisis center, where he was given counseling and help with the electric bill. He had always thought of himself as middle-class, and it amazed him to come so close to living in a homeless shelter. But the mental ward and the crisis center sort of snapped him out of it. He read a book called Finding Life Beyond Trauma and started taking
deep breaths, got in touch with his spirituality, learned to turn away from his worst thoughts. Since the medical field was recessionproof, he signed up for a training course, paid for by the government, as a home health aide. He found a job making $10.50 an hour, without benefits, helping a ninety-one-year-old World War II vet with dementia go to the bathroom. It was no harder than repairing millionaires’ yachts. Mike was glad to be of use.

  * * *

  Van Sickler and some colleagues at the paper crunched a lot of data about foreclosed houses in Hillsborough County. They were everywhere, but they clustered in two places: the older city slums and the ghost subdivisions. Van Sickler’s mapping software showed a bright red dot at Carriage Pointe, the development built on top of a tropical fish farm in Gibsonton: the foreclosure rate was 50 percent, the county record. Van Sickler and a photographer from the paper, Chris Zuppa, started driving out to Carriage Pointe in the evenings to find out what was happening there.

  It was one of the weirdest places in Van Sickler’s life as a reporter. One night, he and Zuppa saw emaciated cows standing in the fields between the rows of single-family houses. The cows had been brought in so that some homeowner could claim agricultural land use for a tax break, and now they were starving because no one was feeding them. Van Sickler and Zuppa knocked on a lot of doors, but it was hard to find anyone home, or anyone who would talk. The owners stranded here were mostly families that had viewed Carriage Pointe as a starter home on their way to someplace else. When prices dropped by 50 percent, they were trapped, and furious with Lennar, the developer, which had promised them a pool, a community center, and a limit on investment homes of 20 percent. As it turned out, a lot of the owners of record lived in places like Fort Mill, South Carolina, and Ozone Park, New York, and they didn’t care what life was like for people stuck in Carriage Pointe. Some of the foreclosed houses were being used by drug dealers or traffickers in stolen goods, littered with contraband. There had even been a shooting. Sheriff’s deputies were making nightly visits out to Carriage Pointe. Paranoia was running high, and one man proudly showed Van Sickler the security cameras he’d installed on his driveway.