Archive for April, 2011
There is an old joke among demographers (a group well known for their hilarity) about a drunk who loses his car keys at the front door of a house that has no porch light. After he realizes his loss, he goes to the nearest street light but well away from the front door to look for them. When asked why he wasn’t looking where he lost the keys, he replied, “This is where the light is.”
Looking “where the light is” is the bane of demographic analysis. This explains the great excitement of pro-suburban analysts like Joel Kotkin, Wendell Cox, and my Brookings colleague Rob Lang about the less than stellar growth of core cities during the past decade. As Kotkin and Cox recently wrote:
“During the 2000s, the census shows, just 8.6 percent of the population growth in metropolitan areas with more than a million people took place in the core cities; the rest took place in the suburbs.”
Unfortunately, the census shines the light on the terms “city” and “suburb”–neither of which are the keys to understanding today’s built environment.
Core cities are comprised of pedestrian-oriented urban places, how Jerry Seinfeld lived, but they also include auto-centric suburban places, like the San Fernando Valley in the city of Los Angeles or the Palisades in the District of Columbia. Likewise, the suburbs of those core cities include classic subdivisions and McMansions, like the home of Tony Soprano, but they also include booming places like Old Town Pasadena, Reston Town Center near Dulles Airport outside D.C., and revitalized Jersey City and Hoboken, NJ, on the other side of the Hudson River from Manhattan.
The issue is where are walkable urban places being built, and they are being built in both central cities and the suburbs surrounding them. My 2007 survey of the walkable urban places in the top 30 metros showed 50 percent of them were in central cities and 50 percent were in the suburbs. In the metro area with the most walkable urban places, the Washington region, 70 percent of the walkable urban places were in the suburbs. These included Bethesda and Silver Spring in suburban Montgomery County, nine places in suburban Arlington County (like Ballston and Crystal City), and the newly built Washington Harbor in suburban Prince George’s County.
Until we focus on the form of the built environment, walkable urban versus drivable suburban, we will be that drunk under the street light trying to find our lost keys.
Additionally, the major evidence of the demand for walkable urban places, both center city and in the suburbs, is that the market demands a premium for walkable urban houses, apartments, and office space. These high prices are perversely used by the skeptics to somehow prove this is a small niche market. To the contrary, high prices demonstrate the severe shortage of supply, leading to significant pent-up demand.
April 19, 2011 – Nationwide housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units in March from an upwardly revised number in the previous month, the U.S. Commerce Department reported today. Coming on the heels of disappointing declines in February, this gain was represented in both the single- and multifamily sectors, and was mirrored by substantial improvements in building permit issuance for the same period.
“While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery.”
“The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season,” said NAHB Chief Economist David Crowe. “While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes.”
Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multifamily sectors as well as three out of four regions. On the single-family side, a 7.7 percent gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multifamily starts also gained back a portion of the ground they lost earlier, with a 5.8 percent increase to 127,000 units.
Regionally, housing starts posted double-digit gains of 32.3 percent in the Midwest and 27.6 percent in the West, as well as a 5.4 percent gain in the Northeast. The South was the only region to post a decline in housing starts in March, of 3.3 percent.
Meanwhile, issuance of building permits, which can be an indicator of future building activity, rose by an impressive 11.2 percent to a seasonally adjusted annual rate of 594,000 units, more than offsetting the previous month’s decline. Single-family permits rose 5.7 percent to 405,000 units, while multifamily permits rose 25.2 percent to 189,000 units.
The Northeast was the only region to not post a gain in building permits this March, remaining unchanged from the previous month. Meanwhile, the Midwest posted a 6.9 percent gain, the South, a 6.3 percent gain, and the West, a 37.1 percent gain.
Amid the heated rhetoric and complex restructuring proposals, Fannie Mae and Freddie Mac are operating as usual—minus the risky business—and slowly recovering. Their improving health could diminish the sense of urgency regarding their future.
With a strong economy led by government, education, and health care, North Carolina’s Raleigh-Durham/Research Triangle area is poised to see improved real estate markets in 2011, say local insiders.
Dan Houser says his well-kept, middle-class neighborhood in St. Peters looks much as it did when he moved there in 1989 with one noticeable exception.
Gone are the sounds of street hockey and football games.
“There aren’t many children,” said Houser, 64, an accountant who lives on Julie Lane with his wife and their 18-year-old son.
It’s a tale repeated across area suburbs.
Some areas of St. Charles and St. Louis counties that boomed with new housing in the 1970s and ’80s saw slight population declines over the last decade — but not so much because the original homeowners moved out.
Their kids did.
And while some empty nesters have shed their two-toned, cedar-sided ranch homes for downtown condos or Florida retirement communities, many baby boomers have opted for what sociologists call “aging in place.”
For now, city officials in places such as St. Peters, Ballwin, Manchester and Maryland Heights don’t seem too concerned about the graying of their communities.
“We are still very stable,” said Ballwin City Adminstrator Robert Kuntz, whose city lost 879 people, or 3 percent of its population, over the last decade.
But some experts warn that stability might be threatened if current trends continue.
The older the population, the less inclined it is to pass new taxes for schools or other community improvements, partly because residents are on fixed incomes, noted John McIlwain, of the Washington-based Urban Land Institute.
And as some reach their 70s and 80s, their demand for medical, transportation and other services grows.
“People in their 80s become more isolated,” McIlwain said.
In short, just because the suburbs are great places to raise kids doesn’t mean they are great for growing old.
“It’s a whole shift that some suburbs are just beginning,” McIlwain said. “If this trend continues, and it’s likely going to, it’s going to hit them right between the eyes in five to 10 years.”
WESTWARD EXPANSION
So far, evidence of the second-ring suburbia’s aging population is mostly anecdotal. The Census Bureau has yet to release hard numbers on the percentage of residents over 55 years old.
But some city officials say it’s the best explanation for the declining numbers in some census tracts.
In St. Peters, census data show that while St. Peters’ overall population grew to 52,575 from 48,427 in the last 10 years, the population in two census tracts in the central part of the city with aging housing stock dropped by more than 6 percent.
That area is generally bounded by Mid Rivers Mall Drive and Mexico and Spencer roads and the southern city limits. An unincorporated area just to the south with homes of a similar age experienced a drop of about 8 percent.
In the 1970s and 1980s, St. Peters was part of the first wave of heavy westward migration to St. Charles County. The city overall ballooned from just 486 residents in 1970 to 15,700 in 1980 and 40,660 by 1990.
Since then, the county’s population surge has moved west, first to O’Fallon and then to Wentzville as younger families sought larger homes, with features such as vaulted ceilings, three-car garages and backyards big enough to play soccer.
On Jane Drive in St. Peters, Debby Goggins, 58, a nurse who raised two daughters in the house she and her husband bought in 1979, pointed out three houses whose residents have been her neighbors “forever.” Only a few young kids live close by, she said.
Overall, the percentage of children living in St. Peters dropped to 23 percent from 29 percent in the last decade while in Wentzville, the percentage of residents under age 18 rose to 38 percent from 32 percent.
“Based on the age of housing stock, it’s kind of a natural progression,” said Darren May, who tracks demographics for the St. Charles County Department of Community Development. “Homes had families in them at one time. Then Mommy and Daddy or just Daddy.”
Joe Zanola, whose Zanola Co. is the St. Louis area affiliate of the MarketGraphics housing market research firm, said some older communities losing population aren’t providing enough newer homes of various styles for people in different age brackets.
For example, he said, some longtime residents would like to move to a different type of home if it’s in the same locale, but few are available so they stay put.
“You have an embedded population of boomers aging who don’t want to leave the area but would gladly accept an alternative,” he said.
That in turn means a shortage of older homes available for younger families to move into, which helps explain why some have moved farther west to Wentzville, where the population has soared by 322 percent in the last decade.
Cathy Pratt, a St. Peters development official, said two new large developments — Bellemeade and Ohmes Farm — are filling out slower than expected because of the recession, but eventually they should help population in the central part of the city rebound.
In Maryland Heights, although the city’s overall population grew by 7 percent, two census tracts in the north part of the city with dated homes lost a combined 570 residents.
Councilman Chuck Caverly said the city has been combating the problem of out-of-date housing stock using community development block grants. The program gives low-income homeowners interest-free loans for improvements as a way to keep up older neighborhoods.
“It’s a way to keep people in their homes and keep the value up,” he said.
One goal is for those homes to be attractive starter homes for young couples as the elderly population dies off.
Many of those homes were built in the 1950s and ’60s when owning “a carport was a huge step up,” Caverly said.
WHO WILL DO DRIVING?
Now, half a century later, suburban communities designed around the autombile are facing difficult questions.
What happens when many residents can no longer get behind the wheel?
Who will bear the costs of getting them to groceries, to doctors and to a host of other places?
“As they age, they need more services, and those suburbs are not designed for more services,” said McIlwain, of the Urban Land Institute.
Mary Schaefer, executive director of the Mid-East Area Agency on Aging, agreed.
“There is an astonishing need for transportation for seniors who don’t drive,” she said. “It’s growing with the population.”
The agency serves residents in St. Louis, St. Charles, Jefferson and Franklin counties.
Manchester Mayor David Willson worked with Schaefer in February in the Mayors for Meals program. He and 24 other mayors delivered food to homebound residents. The majority were elderly and widowed.
When he looks out his front door, Willson can see homes that used to have five and seven people now with just two occupants.
Willson said he and other city officials discussed Manchester’s 6 percent population loss in February when the numbers first came out. The city lost 1,067 residents.
The explanation seemed obvious enough: a growing senior demographic. But the overall impact was less clear.
“What it’s going to do in 10 years,” Willson said, “I couldn’t even begin to tell you.”
According to Reed Construction Data, the Texas metros of Houston and Austin had more new-housing permits per resident than anywhere else during the past year. Right behind them were the North Carolina metros of Raleigh-Durham and Charlotte. Read which metros cracked the top 10 and about the effect of damaged credit histories on the new-home market.
Housing construction activity is showing a few pockets of life across the U.S. While single-family and multi-family permits continue to remain below pre-recession levels in more than 95 percent of metropolitan areas, major markets in Texas and North Carolina lead the nation in new construction activity, on a per-capita basis.
According to Reed Construction Data, the Texas metros of Houston and Austin had more new-housing permits per resident than anywhere else during the past year. Right behind them were the North Carolina metros of Raleigh-Durham and Charlotte. Two other Texas locales, Dallas-Fort Worth and San Antonio, also cracked the Top 10, and most other top metros were hundreds of miles from the East or West coasts.
Permit issuance is an indicator of future building activity, and the implication for ULI members is that the new-homes market is recovering faster in parts of the central U.S. than on the coasts. According to Reed Construction Data’s chief economist, Jim Haughey, every metro market except some in Texas and the Carolinas overbuilt during the housing boom. Plus, the foreclosure crisis has removed a large number of households from the new-home market because of damaged credit histories. Metros with high levels of housing construction are still attracting new residents and businesses because of their low cost, relative to the coasts, Haughey said.
Here are Reed Construction Data’s Top 10 housing markets by permits per 1,000 population from February 2010 through February 2011:
BuildUpNow - Condominium and New Home Consultants 