by Sarah Goodyear.
Last week, I wrote about the mind-bending
case of a developer who is giving away cars in order to convince people to
buy houses in a far-flung exurban development. It’s kind of like giving away
cigarettes to sell funeral plots.
The absurdity of the buy-a-house-get-a-car-free approach
only became clearer when I read a pair of articles over the weekend—one about
demographic trends, the other about shrinking cities.
The first comes from Robert Steuteville, writing on New
Urban Network about “The
coming housing calamity.” It details how an aging populace and changing
households could reveal critical weaknesses in our current housing stock and
C. Nelson, one of the nation’s most prescient housing market researchers, says
the worst is yet to come [in the housing market]. The industry faces
demographic and economic forces that will apply unrelenting downward pressure
on the market for the next decade, Nelson told a group of journalists at the
Lincoln Institute of Land Policy in Cambridge, Massachusetts. He called his
presentation “The Decade of Calamity.”
professor of city and regional planning at the University of Utah, reported prior to
the housing crash that the US faced a massive oversupply of large-lot
single family houses and an undersupply of multifamily units—and he warned
that Fannie Mae and Freddie Mac would confront deep troubles. All of these
views have held up—one reason why Nelson has credibility now. The other
reason is that Nelson’s views are based on solid research—some presented for
the first time at the symposium in mid-April.
the current demographics constant—that is to say, isolating and examining
the change in the populace between 2010 and 2020—reveals much about the
demand for new housing. Ninety percent of the increase will be households
without children, and 47 percent will be senior citizens (the latter resulting
from the rising tide of Baby Boomers who started turning 65 last year) …
of these demographic groups lean toward multifamily and away from large-lot
sprawl. The impact of so many new households without children is obvious, but
readers may not find it immediately apparent why senior citizens favor
multifamily housing. Nelson explains: When those 65 and older move, 80 percent
vacate single-family houses, but only 41 percent move into single-family units.
The rest—59 percent—move into multifamily buildings for a variety of
reasons such as low maintenance and proximity to services. That’s a huge shift
coming from the decade’s fastest growing demographic group. “At 65, people tend
to sell houses,” says Nelson. “That’s going to impact society in a very big way
starting roughly five years from now.” He calls this effect “the great senior
Sure, you can see this as calamitous, and for developers who
are wedded to extending sprawl, it will be. But instead of wringing our hands
over the latest apocalyptarian scenarios, we should be thinking instead of the
opportunities presented by the shifting needs and desires of the U.S.
Those opportunities are both economic and environmental. If
people aren’t going to be buying large-lot single-family homes in
ever-more-distant suburbs, what kind of housing solutions are they going to
want? If they aren’t going to be buying more and newer patio sets and
barbecues, what are they going to be buying? Isn’t this a great chance to create
stronger, more resilient communities that are more sustainable, using market forces as leverage? And potentially to help build local retail economies? Christopher Leinberger of the Brookings Institution and Patrick Doherty of the New America Foundation have written powerfully about the potential of this kind of development to drive future growth.
More from the New Urban Network piece:
Despite the general bad news for the housing industry, some sectors will
flourish—especially transit-oriented development, rental units, and
multifamily and small lot housing. Some new urban development will
support the continued revitalization of cities, but much will be in the
suburbs, Nelson says.
The division of McMansions into multifamily homes, the type of solution that some planners have been advancing recently, is one possibility Nelson suggests.
In a market like this, grand developments might end up being less meaningful than smaller-scale, individually tailored rehabilitation and reclamation of existing buildings.
Which brings me to the second piece that caught my eye in
the last couple of days. Roberta Brandes Gratz wrote a post on Citiwire called
“How to beat the shrinking cities
syndrome,” in which she discusses a recent auction of distressed properties
in New Orleans that surprised city officials with the active bidding that it
According to Gratz, the auction—which featured 100
distressed properties—drew 1,000 bidders, and “officials were astounded.” Their astonishment makes sense, considering that the New Orleans metro area lost 11 percent of its population between 2000 and 2010. That shift, the biggest loss among the nation’s largest metropolitan areas, was precipitated by Hurricane Katrina and cemented by a dismal job market.
Gratz thinks there are lessons to be learned from the New
Orleans example—and that they counter the approach being pursued in cities
like Detroit, where demolition is being celebrated as a necessary prelude to a
wait years for big developers to buy big swaths of land for redevelopment with
the usual generous assortment of subsidies and tax incentives? Why not let the
market reemerge slowly with small help offered to individual buyers? This
happens to be the way regeneration has occurred in the many
once-deteriorated-but-now-revitalized neighborhoods across the country.
Developers are never the first ones into challenged neighborhoods; they follow
the small investors who take the risks and prove that the market exists. …
real challenge is to overcome the state and federal regulations and funding
opportunities that make this revitalization direction so difficult. Demolition
money is easier to come by. Big demolition contracts are easier to give. Mayors
love the photo-op that gives the impression of cleaning up blight. Lenders
don’t like the look of dilapidated old buildings, even if they are historic or
just solid old construction. They do, however, understand demolition and
formula building projects. And even though preservation, restoration,
conservation and renovation have saved more neighborhoods than urban renewal
ever did, the money to do more of it is the most complicated to get.
I don’t pretend to have the answers for every city, or any
city. But I do know that economies evolve. “New housing starts” wasn’t
always the definitive measure of our economic viability as a nation. And as
demographic trends change and resources become more limited, it’s a marker that needs to be
put into a different perspective. Redevelopment of existing properties can
create jobs, too. Building on the historic framework of
existing cities can take advantage of existing infrastructure that taxpayers
are already paying to maintain.
Resources are finite. There’s only so much land, so much energy, so much time to commute.
For inventive, entrepreneurial
minds, those limitations shouldn’t be terrifying. We can adapt. That’s what we do.
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