By David Daddio

Flickr photo from woodleywonderworks.

Flickr photo from woodleywonderworks.

It’s a common refrain among Smart Growth advocates across the United States that goes something like this: “The fallout from the economic crisis is hitting far out suburban and exurban communities much harder than urban areas. This signals the end of unchecked suburban sprawl and a movement towards more sustainable, dense, transit-oriented communities.” It’s a refrain that, given my own interest in seeing the United States adopt a more compact, transit and climate friendly urban form, I’d like to repeat in confidence.

Indeed, there are signs that our communities are becoming more compact. Even before the crisis Americans were shifting to smaller house lots and the country’s tolerance for expensive houses and long commutes appeared to be waning. Many urban cores were coming back to life with startling speed after years of neglect due to various demographic trends. Demand for Smart Growth communities was substantial and increasing. Then with the economic crisis, capital flows ceased and everything from suburban master-planned communities, to exurban mega-malls, to dense urban infill redevelopment came to a grinding halt: some even mid-construction.

The Urban Land Institute’s highly-regarded and widely-read Emerging Trends in Real Estate 2010 annual report provides a sobering outlook on U.S. investment and development in the year ahead; especially in suburban settings. According to the report, which draws heavily from surveys of real estate professionals and experts, sprawling areas with heavy foreclosure rates are unwise places to invest, whereas multi-family and dense urban infill projects show signs of resilience. When the crisis is over, ULI predicts:

housing and development patterns will become more urban focused—incorporating smaller lots, townhouses, and town-center mixed-use projects, which include single-family housing and condominium buildings. Developers also will construct more affordable housing options—European-scale layouts with smaller kitchens and bathrooms (no more whirlpools). More-frugal Americans realize they don’t need all that space, especially if it saves on energy and taxes. “The extra bedroom, family room, recreation room, and three-car garage go by the boards.”

The report goes even further later on:

Infill vs. Suburbs. Road congestion, higher energy costs, and climate change concerns combine to alter people’s thinking about where they decide to live and work. “It’s a fundamental shift.” The lifestyle cost-of-living equation starts to swing away more dramatically from bigger houses on bigger lots at the suburban edge to greater convenience and efficiencies gained from infill housing closer to work. These homes may be more expensive on a price-per-pound basis, but reduced driving costs and lower heating/cooling bills provide offsets. And time saved avoiding traffic hassles moderates stress and enhances productivity. “Two-hour commutes reach a tipping point with higher energy costs” and “near-in suburbs will do well especially if they link to business cores by mass transportation.” Empty nesters and later-marrying echo boomers continue to flock to cities and urbanizing suburban areas. For aging baby boomers, infill apartment or townhouse living means less upkeep and proximity to cultural and entertainment attractions. The young singles crowd stays closer to the action, too—they don’t need to worry about finding the right suburban school district for children. As 30-something couples have kids and consider schools, “more will orient to infill locations and less edge—increasing numbers of suburban school systems will lose advantages as tax bases falter.”

With something as complex and continent-wide as development patters, we can’t just assume that today’s crisis translates into some fundamental shift in the way that we build our cities. It’s easiest for me to think of nationwide trends in urban centralization/decentralization in terms of the overriding factors and put aside the temporary economic crisis. Academic consensus and economic theory seems to point to income and transportation costs (commuting time and costs) as the fundamental drivers of how we distribute development.

Thus in America’s postwar years, rapidly expanding incomes among the middle class combined with cheap automobiles, cheap gas, and newly recently completed segments of the Interstate Highway System lead to a sustained and unprecedented period of suburbanization. That’s not to say that there weren’t other major factors of public policy and social reality that fueled the situation, just that income and transportation costs were the primary drivers. Housing and jobs moved far beyond the traditional urban centers to suburban tract housing and office parks near major roads where before they were once constrained to locations accessible in walkable urban grids or by mass transit like streetcars.

So what do the trends of income and transportation costs tell us about the post-great recession American urban development? Of course that will depend largely on how robust the recovery is as well as how widespread its benefits are across the population. Rapidly increasing home values led to a frenzy of building, investing, and over-leveraging where people could use the equity they built in their homes as a blank check for further real estate investment. Granite counter tops and stainless steel appliances, once reserved for the richest, became standard cul-de-sac fair. “McMansions” sprouted up everywhere, purchased in many cases by people would couldn’t afford them with mortgages they didn’t understand.

Experts agree that these trends in large part contributed to the economic collapse, so we can only hope they won’t come back in force once the economy recovers. All signs seem to point to a less affluent, more frugal American consumer. The ULI report confirms that in the first graph below. You’ll notice that in the near term developers are most optimistic about housing types geared towards a decidedly less affluent consumer with multi-family rentals, mobile homes, and moderately priced single family homes rounding out the industry’s top three least dire housing products.

On the transportation front, post-great recession American development patterns will also depend on how severely gas prices rebound to 2008 levels and perhaps higher. The impacts of rapidly rising gas prices could be largely offset by increases in fuel mileage efficiency proposed by the Obama administration. Maybe more significantly than the monetary price of transportation, development patterns will depend on how overburdened highways and transit systems are and how high land prices go. Cheap, accessible, developable land will still be a recipe for sprawl; that is unless sprawl is stymied by local planning and zoning authorities. Transportation and relative land prices will be specific to individual metropolitan areas. Some will sprawl more, some less, but all of them will still sprawl quite substantially without concerted public policy.

Development prospects for for-sale housing in 2010. From ULI's Emerging Trends in Real Estate 2010 survey.

Development prospects for for-sale housing in 2010. From ULI's Emerging Trends in Real Estate 2010 survey.

Development prospects for for niche and mutli-use property types in 2010. From ULI's Emerging Trends in Real Estate 2010 survey.

Development prospects for for niche and mutli-use property types in 2010. From ULI's Emerging Trends in Real Estate 2010 survey.

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