A fascinating article in the New York Times looks at how changing demographics and the housing crash the USA has experienced over the past five years is changing the future form of their cities – away from car dependent urban sprawl and towards higher-density walkable urban areas.
Drive through any number of outer-ring suburbs in America, and you’ll see boarded-up and vacant strip malls, surrounded by vast seas of empty parking spaces. These forlorn monuments to the real estate crash are not going to come back to life, even when the economy recovers. And that’s because the demand for the housing that once supported commercial activity in many exurbs isn’t coming back, either…
… It was predominantly the collapse of the car-dependent suburban fringe that caused the mortgage collapse.
In the late 1990s, high-end outer suburbs contained most of the expensive housing in the United States, as measured by price per square foot, according to data I analyzed from the Zillow real estate database. Today, the most expensive housing is in the high-density, pedestrian-friendly neighborhoods of the center city and inner suburbs. Some of the most expensive neighborhoods in their metropolitan areas are Capitol Hill in Seattle; Virginia Highland in Atlanta; German Village in Columbus, Ohio, and Logan Circle in Washington. Considered slums as recently as 30 years ago, they have been transformed by gentrification.
Simply put, there has been a profound structural shift — a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.
Certainly in Auckland we have seen some of the same process happening over the past 20-30 years. Parts of the inner-city, like Ponsonby and Freemans Bay, that were verging on being slums in the 1960s and 1970s are now some of the most sought-after places to live. We have also seen, over the past 15 years, a dramatic increase in the number of people living in the city centre.
What we haven’t seen so much is the real estate crash the USA has experienced, the vast empty parking lots (except for Manukau City of course), vacant strip malls, empty houses and so forth. I suspect that this is largely due to our urban limits – which made ‘over-building’ during the boom years that much more difficult.
An interesting question is how these trends might continue into the future, and here’s where demographic change becomes important:
The shift is durable and lasting because of a major demographic event: the convergence of the two largest generations in American history, the baby boomers (born between 1946 and 1964) and the millennials (born between 1979 and 1996), which today represent half of the total population.
Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.
The millennials are just now beginning to emerge from the nest — at least those who can afford to live on their own. This coming-of-age cohort also favors urban downtowns and suburban town centers — for lifestyle reasons and the convenience of not having to own cars.
Over all, only 12 percent of future homebuyers want the drivable suburban-fringe houses that are in such oversupply, according to the Realtors survey.
There still seems to be quite a lag in Auckland between our changing demographics and the types of housing which are being built. Even though an aging population means smaller and smaller household sizes, we continue to construct larger and larger houses. I’m guessing that it’s probably our planning rules at fault here, which prevent the splitting of existing houses into smaller units and generally discourage urban intensification. This is setting ourselves up for a huge imbalance in the future between the demand for smaller places and the supply of oversize houses.
The connections between these changes and transport shouldn’t be under-estimated. The article highlights that the transport decisions which will support our future urban form may be very different to those we have been making in the past. Critically, and I could not support this issue more, local government should have a greater say over how transport money is spent:
The cities and inner-ring suburbs that will be the foundation of the recovery require significant investment at a time of government retrenchment. Bus and light-rail systems, bike lanes and pedestrian improvements — what traffic engineers dismissively call “alternative transportation” — are vital. So is the repair of infrastructure like roads and bridges. Places as diverse as Los Angeles, Phoenix, Salt Lake City, Dallas, Charlotte, Denver and Washington have recently voted to pay for “alternative transportation,” mindful of the dividends to be reaped. As Congress works to reauthorize highway and transit legislation, it must give metropolitan areas greater flexibility for financing transportation, rather than mandating that the vast bulk of the money can be used only for roads.
For too long, we over-invested in the wrong places. Those retail centers and subdivisions will never be worth what they cost to build. We have to stop throwing good money after bad. It is time to instead build what the market wants: mixed-income, walkable cities and suburbs that will support the knowledge economy, promote environmental sustainability and create jobs.
I really do hope the final version of the Auckland Plan takes these matters into consideration.