I have long argued against urban sprawl as a pattern of development, because of its inevitable car dependency, its poor sustainability and its general soullessness. With the government undertaking a serious overhaul of planning regulations that relate to urban areas – potentially making it easier for our cities to sprawl – I read with interest an article from the USA which argues that our changing demographics and cultural preferences mean that the demand for sprawl is simply unlikely to be there in the future. Instead, as our population ages and as younger generations place greater emphasis on living in vibrant and exciting town centres, we may already have more than enough low-density single-dwelling houses out there. What we’re likely to end up having a shortage of are smaller places in walkable urban areas.
It’s well worth a read. Here are some sections:
We’re unlikely, however, to see a real estate recovery based on a continuation of the type of development that has driven the industry for the past few generations: low-density, car-dependent suburbs growing out of cornfields at the edge of metropolitan areas. That’s because there is now a massive oversupply of such suburban fringe development, brought on by decades of policy favoring it—including heavy government subsidies for extending roads, sewers, and utilities into undeveloped land. Houses on the exurban fringe of several large metro areas have typically lost more than twice as much value as metro areas as a whole since the mid-decade peak. Many of those homes are now priced below the cost of the materials that went into building them, which means that their owners have no financial incentive to invest in their upkeep. Under such conditions, whole neighborhoods swiftly decline and turn into slums. This happened in many inner-city neighborhoods in the 1960s, and we’re seeing evidence of it in many exurban neighborhoods today. The Los Angeles Times reports that in one gated community in Hemet, east of L.A., McMansions with granite countertops and vaulted ceilings are being rented to poor families on Section 8 vouchers; according to the Washington Examiner, similar homes in Germantown, Maryland, outside Washington, D.C., are being converted to boarding houses.
In New Zealand we never ended up with quite the same extreme level of “over-building” during the real-estate boom years – perhaps because of planning restrictions such as the MUL. This has meant that house prices haven’t crashed in the way they have in parts of the USA.
Meanwhile, the Great Recession has highlighted a fundamental change in what consumers do want: homes in central cities and closer-in suburbs where one can walk to stores and mass transit. Such “walkable urban” real estate has experienced less than half the average decline in price from the housing peak. Ten years ago, the highest property values per square foot in the Washington, D.C., metro area were in car-dependent suburbs like Great Falls, Virginia. Today, walkable city neighborhoods like Dupont Circle command the highest per-square-foot prices, followed by dense suburban neighborhoods near subway stops in places like Bethesda, Maryland, and Arlington, Virginia. Similarly, in Denver, property values in the high-end car-dependent suburb of Highland Ranch are now lower than those in the redeveloped LoDo neighborhood near downtown. These trend lines have been evident in many cities for a number of years; at some point during the last decade, the lines crossed. The last time the lines crossed was in the 1960s—and they were heading the opposite direction.
It would be very interesting to see a comparison across Auckland as to which suburbs have held their real estate values the best over the past couple of years, and which suburbs have experienced declining real estate values.
But while looking back to the past provides something of an economic argument against encouraging too much sprawl, the really interesting things emerge when we start to look forward into the future – and start considering changing demographics and changing social preferences:
But the biggest factor, one that will quickly pick up speed in the next few years, is demographic. The baby boomers and their children, the millennial generation, are looking for places to live and work that reflect their current desires and life needs. Boomers are downsizing as their children leave home while the millennials, or generation Y, are setting out on their careers with far different housing needs and preferences. Both of these huge demographic groups want something that the U.S. housing market is not currently providing: small one- to three-bedroom homes in walkable, transit-oriented, economically dynamic, and job-rich neighborhoods.
The baby boom generation, defined as those born between 1946 and 1964, remains the largest demographic bloc in the United States. At approximately 77 million Americans, they are fully one-quarter of the population. With the leading edge of the boomers now approaching sixty-five years old, the group is finding that their suburban houses are too big. Their child-rearing days are ending, and all those empty rooms have to be heated, cooled, and cleaned, and the unused backyard maintained. Suburban houses can be socially isolating, especially as aging eyes and slower reflexes make driving everywhere less comfortable. Freedom for many in this generation means living in walkable, accessible communities with convenient transit linkages and good public services like libraries, cultural activities, and health care. Some boomers are drawn to cities. Others prefer to stay in the suburbs but want to trade in their large-lot single-family detached homes on cul-de-sacs for smaller-lot single-family homes, townhouses, and condos in or near burgeoning suburban town centers.
Generation Y has a different story. The second-largest generation in the country, born between 1977 and 1994 and numbering 76 million, millennials are leaving the nest. They may sometimes fall back into the nest, but eventually they find a place of their own for the first time. Following the lead of their older cousins, the much smaller generation X (those born between 1965 and 1976), a high proportion of millennials have a taste for vibrant, compact, and walkable communities full of economic, social, and recreational opportunities. Their aspirations have been informed by Friends and Sex in the City, shows set in walkable urban places, as opposed to their parents’ mid-century imagery of Leave It to Beaver and Brady Bunch, set in the drivable suburbs. Not surprisingly, fully 77 percent of millennials plan to live in America’s urban cores. The largest group of millennials began graduating from college in 2009, and if this group rents for the typical three years, from 2013 to 2018 there will be more aspiring first-time homebuyers in the American marketplace than ever before—and only half say they will be looking for drivable suburban homes. Reinforcing that trend, housing industry experts, like Todd Zimmerman of Zimmerman/Volk Associates, believe that this generation is more likely to plant roots in walkable urban areas and force local government to fix urban school districts rather than flee to the burbs for their schools.
While New Zealand is certainly not a carbon-copy of the trends being experienced in the USA, there are many similarities. I think there has been a growing embrace of urbanism in Auckland over the past decade or so – perhaps partly as a result of our emerging ‘cafe culture’, perhaps as a result of our growing ethnic diversity with many new arrivals from parts of the world used to large, busy and high density cities. Obviously we are also experiencing the same demographic shifts as the USA. It remains to be seen to what extent baby-boomers want to abandon their suburban homes for something more ‘inner-city’ (as opposed to shifting to other parts of NZ or to lifestyle blocks), but certainly it’s easy to see how the demand for your typical suburban family home is not going to increase as much as other housing forms in the future.
Furthermore, there is likely to be a growing realisation – particularly for “generation Y” people like me – that living in places where you’re not dependent on your household owning two or three vehicles will make a big difference to your financial situation.
Most importantly, the very act of moving to more walkable neighborhoods will free families from the expense of buying, fueling, and maintaining the two or more cars they typically need to get around in auto-dependent suburbs. Households in drivable suburban neighborhoods devote on average 24 percent of their income to transportation; those in walkable neighborhoods spend about 12 percent. The difference is equal to half of what a typical household spends on health care—nationally, that amounts to $700 billion a year in total, according to Scott Bernstein of the Center for Neighborhood Technology. Put another way, dropping one car out of the typical household budget can allow that family to afford a $100,000 larger mortgage.
An interesting way of putting it. Owning one fewer car frees up enough of your income to make it possible to service a mortgage $100,000 greater.
Roads-focused transport spending and planning regulations that encouraged urban sprawl formed a self-reinforcing cycle throughout much of the second half of the 20th century and produced a series of more and more auto-dependent suburbs in Auckland, as well as throughout the USA. But there’s nothing stopping the same process potentially working in reverse in the future:
The coming demographic convergence will push construction inward, accelerating the rehabilitation of cities and forcing existing car-dependent suburbs to develop more compact, walkable, and transit-friendly neighborhoods if they want to keep property values up and attract tomorrow’s homebuyers. All this rebuilding could spur millions of new construction jobs. But more importantly, if done right, with “smart growth” zoning codes that reward energy efficiency, it would create new markets for power-conserving materials and appliances, providing American designers and manufacturers with experience producing the kinds of green products world markets will increasingly want.
In the end, we cannot escape the consequences of demographic change. Our population is getting older, our household sizes are getting smaller, the stereotypical “mum, dad and two-and-a-half-kids” family is getting rarer and rarer. Isn’t it time our planning system, and our transport policies, starting catching up with these changes?