An interesting follow-up to my story last week on the future of suburbia is a profile of Merced, Calif., in the Aug. 24 issue of The New York Times. Skeptical that some burbs might become the new ghost towns? Check out the picture of the Riverstone housing development that accompanies this story, of an unfinished project baking in the sun and dirty air of a boomtown gone bust.

The Merced metro area has been hit hard by the popping real estate bubble, with one of the highest foreclosure rates in the country. In the past three years, housing prices have fallen 50 percent, and 85 percent of homes have "negative equity," meaning their market value has fallen below what's owed on them. The Times story includes a map of other counties in the U.S. with a sizable negative equity situation, and a number are in Washington and Oregon, including the heart of central Pugetopolis, where negative equity rates are running in the 10 percent to 20 percent range.

Merced was counting on growth that never quite materialized, including a new campus for the University of California. U.C. Merced only has about 2,000 students and didn't prove transformative. The town prospered in the boom as an affordable, far-flung bedroom town for Bay Area commuters (four hours, round trip), but the real estate market was kept aloft mostly by "flippers" and speculators, not real housing demand. In short, the main industry in Merced was growth itself.

Scarily, the community's answer to the current crisis is to double down its growth bet: Build thousands of more houses to serve California's projected newcomers and the Bay Area's sprawling commutershed by building a entirely new suburban city:

On the western edge of Merced County, near the Diablo Range that separates the Central Valley from the Pacific Coast, is a stretch of empty land that a coalition of landowners has wanted to build on for years. The plan calls for the eventual construction of a city of 16,000 houses called the Villages of Laguna San Luis.

In many ways, the idea makes sense. The pass over the mountains is winding and slow, but if a proposed high-speed train is ever built, the Villages could end up being a bedroom community for San Jose. By 2025, California is projected to grow to 44 million people from the current 37 million. They will need somewhere to live.

The county commission, says the Times, has approved the plan, despite the fact that all the new cars the project would bring would worsen Merced's already terrible air quality (it has one of the highest rates of child asthma in the state), and that providing the new city with water is problematic in a state beleaguered by drought.

Rail fans should also note here that rail is seen as a growth and sprawl driver, not as an alternative to it, as is touted here in Seattle. While rail has some worthy benefits for congestion and limiting carbon emissions, it can, as it has done in the Bay Area, actually boost sprawl and car-centric development in outlying areas. In fact, the citizens and planners of greater Merced seem to be counting on that.

Meanwhile, apocalyptic utopians are counting on a major crash from the peak oil crisis or multiple environmental and climate-induced catastrophes that will force a change in our way of life to something more sustainable. Merced's "ghost" subdivisions could be harbingers. Or they could be temporary setbacks. In boom-and-bust towns there are always gamblers eager to make back what they've lost by placing an even bigger bet, even when their betting strategies have proved highly questionable.