Market trends favor NU

Author: 
Robert Steuteville
Issue Date: 
Sun, 2007-04-01
Page Number: 
1

As national real estate sales slow, demographic and preference trends make smart growth and New Urbanism a good bet.

At a time when real estate in its sprawling forms appears to be losing value more quickly than compact urban development, analyses of the market for New Urbanism and smart growth are relatively favorable. GfK Roper Consulting recently released a report called “Modern Communities” that stated that new urban neighborhoods are the most desirable places to purchase homes. Meanwhile, Arthur C. Nelson, codirector of the Metropolitan Institute at Virginia Tech in Alexandria, asserts that every house built between today and 2030 will have to possess smart growth/new urbanist characteristics if we are to meet consumers’ demands.

The US population will grow by 70 million between 2005 and 2030, so substantial housing construction is needed, Nelson points out. Simultaneously, a huge and continuing demographic shift will increase the percentage of households without children — to 73 percent in 2030 from 52 percent in 1960. With the aging of the Baby Boomers, the annual number of Americans turning 65 is going to triple in the next few years, to nearly 1.5 million a year by 2012. It was less than 500,000 in 2005.

About one-third of buyers want smart-growth features in their housing, Nelson says, citing research by Robert Charles Lesser & Co. real estate consultants. This preference appears to be on the rise, as indicated by the GfK Roper study, which finds that so-called “influential” people like many aspects of New Urbanism. The National Association of Realtors and Smart Growth America report that preferences for specific smart-growth traits range from 40 to 70 percent.

A key to the future is the sectors of the population that will be on the upswing. Eighty-eight percent of the nation’s growth between 2005 and 2030 will consist of households without children, Nelson reports. Overwhelmingly, the demand for new housing will focus on multifamily and small-lot single-family units possessing smart-growth characteristics such as walkable neighborhoods, he says.

A large unmet demand for walkable neighborhoods has already been identified by surveys in Boston and Atlanta. The gap between the supply of walkable neighborhoods and the demand for them may be greatest in sprawling metro areas like Atlanta, where only 35 percent of those who would prefer a pedestrian-oriented neighborhood actually live in one. This gap will only widen, Nelson reports. Fifty-five million multifamily and small-lot single family homes need to be constructed by 2030, he says (see graph). Even if only half of the market shift indicated by preference surveys becomes reality, we still will need 37 million more of these kinds of units, Nelson says. New Urbanism excels in providing multifamily and small-lot single-family housing.

Large-lot single-family housing — defined as units on lots greater than 7,000 square feet — is a category that’s already severely overbuilt, which indicates trouble ahead for those who own and build such housing, he contends. Large-lot housing — currently 53 percent of US housing stock — became the most popular housing to build in the post-World War II era, and it has been supported by conventional zoning throughout the nation. Nelson estimates that we already have 23 million more of these units than will be in demand by 2030. Yet builders are adding to this oversupply.

Large-lot housing appears to be at the heart of the rising foreclosures that sent a chill through Wall Street in March. Meanwhile, the media are reporting that housing closer to the heart of metro areas is holding its value better during the downturn (see the March New Urban News).

Grayfields are the key

Nelson argues that redevelopments of shopping centers offer the perfect solution to providing housing that delivers new urban characteristics. Because suburban retail sites tend to become obsolete in as little as 15 years (by contrast, housing often lasts 150 years), large numbers of “grayfield” acres will open up for redevelopment in the next quarter-century. Nelson estimates that 2.8 million acres of grayfields will become available. If only one fourth of these get redeveloped into mixed-use urban centers, these sites have the potential to supply half of the housing required by 2030, he says.

According to Nelson, grayfield sites are advantageous because they:
• Are large, flat, and well drained.
• Include major infrastructure that will need to be replaced or upgraded (and thus can be modified for mixed use).
• Are sited next to arterials with the capacity for dedicated transit lanes.
• Are under single ownership (reducing the problems associated with site acquisition).
• Are already planned and zoned for uses other than low-density housing.
• Have a greater potential to convert NIMBYs (not-in-my-back-yarders) into YIMBYs (yes, in-my-back-yarders).

Gated down, New Urbanism up

GfK Roper’s report tracked a decline in the desirability and prestige of gated communities. Only 17 percent of Americans — and 15 percent of “influentials” — think that gates are part of an ideal neighborhood, about half as many as thought so in the mid-1990s. More people are valuing elements that point toward smart growth, such as walking distance to small shops and inclusion of parks, civic buildings, and churches. The authors specifically cited well-known new urban communities — such as Celebration, near Orlando, Florida; Prospect in Longmont, Colorado; and Orenco Station, near Portland, Oregon — as examples of a new community ideal, because they foster a sense of place, enhance walkability, and integrate family and community life.

GfK Roper defines “influentials” as people who are regularly asked by friends and peers for recommendations on products and other aspects of daily life.  Influentials  indicate where the overall market is heading in three to five years, the firm says.  Influentials  consider these aspects of an ideal community important: good school district, 86 percent; friendly neighbors, 85 percent; the presence of places of worship, 76 percent; the presence of central gathering spaces such as parks, 70 percent; proximity to neighbors, 59 percent; small stores/banks/businesses within walking distance, 55 percent; public transportation, 55 percent; community or recreation center, 54 percent; presence of fraternal organizations, 35 percent; and gated community, 15 percent.

Original Id: 
2883

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