Inner suburbs will run short of housing, ULI says

The appeal of close-in suburban neighborhoods is rising because of their proximity to major employment centers and because of transit options, Patrick L. Phillips, CEO of the Urban Land Institute, said Feb. 12 in a program on “Sustainable Suburbs: Re-Imagining the Inner Ring” sponsored by the North Carolina  State University College of Design and the Raleigh Department of City Planning.

While many distant communities are suffering a high volume of foreclosures as a result of the recession, Americans are displaying a growing enthusiasm for living in first-tier suburbs, which offer convenience and time-saving features at a time when urban areas are increasingly congested, Phillips said.

There likely will be a housing shortage over the next few years, he predicted. Housing starts, Phillips noted, hit a 30-year low in 2009, when 554,000 units were begun. Because demand for housing in sought-after, accessible neighborhoods such as first-tier suburbs is running strong and will continue to do so, the demand in those locations will outstrip supply, he indicated.

“It’s clear that the disconnect between housing and jobs, long daily commutes, and time wasted in traffic is causing more and more people to rethink how and where they are living,” Phillips said. “This bodes well for first-tier suburbs. Not so well for the exurbs.” 

Phillips cited findings from ULI’s 2010 publication Housing in America (available here), which shows a desire by both baby boomers and Generation Y to live in more pedestrian-friendly, transit-oriented, mixed-use environments that de-emphasize dependence on automobiles. This preference will hold true for suburban development, he predicted.

“Suburban development in the 21st century cannot mean sprawling development; that simply is not a sustainable growth model," Phillips said. "In the suburbs, less land will have to be used to accommodate more people.” 

“We’ve learned that there is a market for compact, mixed-use design, smaller housing space, and development that minimizes the need to drive," he added. "The demand for this has stretched beyond downtown cores and into the suburbs, and it is the first-tier suburbs that are best positioned to accommodate this type of development.”

As urban regions across the US evolve, “piecemeal, haphazard and poorly connected development will become a thing of the past,” Phillips said. “What we can expect is more dense development aimed at conserving energy, water, and land. We’ll see better coordination of land use planning and transportation planning, so that more development is oriented toward transit options."

Among the "forces of change" supporting this shift, he said, are these:

• Echo boomers entering adulthood. The children of baby boomers, members of Generation Y are starting to enter the housing market and workforce. “They are the most technologically connected generation in history — they are far more interested in social networking than cars,” Phillips said.
• Growing number of smaller households. For the long term, household size will shrink steadily, due to more people living alone, delaying marriage and childbirth, and having fewer children. (The recession has caused a bump up in multi-generation households, but this is not expected to be a long-term trend, he indicated.)