The Death of the Fringe Suburb

[Midpack]

I just read a blog that referred to this NYT Op-Ed from a few months ago. We're in a fringe neighborhood IMO and I'm a little nervous about resale longer term. I believe there's a good chance this trend will continue and plan to buy our next home in a walkable, urban area or equivalent - in or near a large metro area with good prospects.

I've also read two convincing books on the topic, The Next Hundred Million: America in 2050 and The Great Reset.

Even if we're wrong, hedging in this direction holds little if any downside for us. Time will tell...

Simply put, there has been a profound structural shift — a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.

Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.

Over all, only 12 percent of future homebuyers want the drivable suburban-fringe houses that are in such oversupply, according to the Realtors survey. This lack of demand all but guarantees continued price declines. Boomers selling their fringe housing will only add to the glut. Nothing the federal government can do will reverse this.

Many drivable-fringe house prices are now below replacement value, meaning the land under the house has no value and the sticks and bricks are worth less than they would cost to replace. This means there is no financial incentive to maintain the house; the next dollar invested will not be recouped upon resale. Many of these houses will be converted to rentals, which are rarely as well maintained as owner-occupied housing. Add the fact that the houses were built with cheap materials and methods to begin with, and you see why many fringe suburbs are turning into slums, with abandoned housing and rising crime.

http://www.nytimes.com/2011/11/26/opinion/the-death-of-the-fringe-suburb.html?_r=1&pagewanted=print

 

[Sundevil]

They need to become small 'cities', but there are a lot of problems with just building houses and not the other types of amenities and retail stores at the same time. Look at North Las Vegas. There are very few hotels anywhere.

Sun City, AZ is what I think will be more prevalent. The 55+ crowd will require people to be a certain age to live in their home owners association and neighborhoods. It makes sense to me.

The demographics and the increasing population will buy up homes though once they get some savings and want to settle someplace.

 

[Nords]

I just read a blog that referred to this NYT Op-Ed from a few months ago. We're in a fringe neighborhood IMO and I'm a little nervous about resale longer term. I believe there's a good chance this trend will continue and plan to buy our next home in a walkable, urban area or equivalent - in or near a large metro area with good prospects.

I hope you decide to buy in a place that you enjoy, and not in a place that you hope to resell for a profit because a demographer looked 40 years in the future.

Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.

This must be the same guy who says that:
1. Boomers will work until they die
2. Boomers are going to lose their homes to foreclosure because they have no jobs or savings
3. Boomers are going to retire, sell all their stocks, and crash the stock market
4. Boomers are going to all move into retirement communities.

Every house that I've owned over the last 30 years has been bigger. I'd much rather die at this address than to downsize to something that might have a better resale value.

 

[Mulligan]

I am thinking along your lines, Nords. Ive actually read that most people who retire actually just stay in the last house they were in when working. Each city has its own trends, however as a general trend, as the the outer suburbs become "long in tooth" I can see people returning to a rebuilt core of a city. But to me the most immediate concern for outlaying family suburb homes is the impact of foreclosures and the turning of these homes into rentals. That trend could have a strong negative impact on the old house value.

 

[audreyh1]

Well, I couldn't wait to get out of the suburbs, even though I lived in one of the coolest cities in the US (Austin, TX) and had great amenities nearby. It's just that when you are not working, suburbs seem sterile and empty as all the other residents are working. And big cities have heavy traffic associated with suburbs. I didn't find them to be retirement friendly. When we retired it became very obvious why they are called "bedroom communities".

We are much happier in a 55+ type community next to a huge state park. We aren't urban/downtown types - we need the great big outdoors nearby. We were also much happier traveling as full-time RVers.

 

[REWahoo]

We were also much happier traveling as full-time RVers.

I'm curious - how much time are you spending on the road now that you've returned to a sticks and bricks house?

 

[Bestwifeever]

I thought gas prices were going to be the death of the fringe suburb. Now it's boomers wanting to downsize to downtown? What next?

 

[audreyh1]

I'm curious - how much time are you spending on the road now that you've returned to a sticks and bricks house?

Last year 3 months over the summer, 6 weeks over the Xmas holidays.

This year - taking a break! LOL! DH actually gets more nature photography done here than when we are traveling. And we are flying again now and starting to plan overseas trips.

 

[samclem]

"Honey, let's sell the house and move."
'Why?"
"I'm tired of using the car to drive to a wide variety of restaurants and shopping. I want to be able to walk to a smaller assortment of restaurants and stores. There will be less competition, so we can at least count on paying more for lower quality stuff."
"That sounds great!"

Seriously, if there's a demand for more pedestrian-friendly towns, zoning commissions and retailers will find a way to meet it. With current demographics we should be able to start knocking down schools in a few years to make room for any neighborhood "centers" Mr and Mrs Boomer will desire in their golden years.

 

[haha]

I don't want to join a debate about this, as people will usually be committed to their current situation. But I saw an interesting item in the Puget Sound Business Journal by some realtors' group. It contrasted SFH price performance since 2007 in Seattle with Redmond- hardly an out-of the-way suburb with little employment. If Redmond is assigned an index value of 1, urban Seattle now stands at 1.5 relative to Redmonds 1.0.

I may have the baseline time wrong, it might be a longer period. There seem to be powerful trends, at least in some areas of the country, that favor more dense living situations.

Ha

 

[donheff]

Who knows what will happen but this rings true to me:

Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.

I have always liked and lived in walkable urban neighborhoods but I have noticed that I (and DW) have recently become interested in walkable small towns and areas that sort of mirror what someone described in another thread as walkable neighborhood islands. I have also noticed that often when I become interested in something (I got heavily back into cycling about 6 years ago) I often read an article telling me I am just following a boomer trend.

The operative word in the quote, however, is "Many." The boomers have never been a monolithic group and won't be in old age. So this doesn't signal the death of the burbs. But as Ha notes, walkable urban cores have held their values and rebounded more during this recession than drive only suburbs and a tilt in boomer interest carries a lot of weight. In any event, Midpack, if you are among us trendy boomers who like walkable neighborhoods why not move to one while you can still walk. Oh, and start looking at bikes while you are at it. And switch to a low carb diet.

 

[Milton]

I wouldn't put very much stock in this. North Americans love their cars, and I doubt that many people are prepared to give up the convenience of unlimited free parking for the joys of walking. See generally Bill Bryson, "Why No One Walks", The Daily Mail, May 1997 (republished as chapter 26 in his 2000 book, "I'm a Stranger Here Myself: Notes on Returning to America After Twenty Years Away").

 

[eytonxav]

Maybe Midpack can do a survey to see how many folks here either returned to a city from the suburbs or plan to. We all know he puts together many interesting surveys.

DW and I have absolutely no desire to be in a big city. A 55+ retirement community sounds pretty good if and when we downsize from the suburban mega mansion. We may visit one of those communities this weekend, which also happens to be located in our town.

 

[ziggy29]

I may have the baseline time wrong, it might be a longer period. There seem to be powerful trends, at least in some areas of the country, that favor more dense living situations.

For people who want "walkable" neighborhoods, that is probably true. Truth be told, I find that attractive but for one small problem. The biggest turn-off for me in terms of where I live is *noise*. And the dense neighborhoods in the cities almost never fare well in that category. Not to mention that any urban environment that is relatively quiet, clean, walkable and safe is going to be way too expensive. But there is a certain attraction to not needing a car, and if you can partially offset the added cost of these neighborhoods by eliminating (or greatly reducing) transportation costs, I suppose the math looks at least a little better.

Frankly, my impression of a 55+ community is that it will be quiet -- which is a reason I'm likely to look into those at some point after I reach the age where age discrimination in housing becomes legal.

 

[Midpack]

I wouldn't put very much stock in this. North Americans love their cars, and I doubt that many people are prepared to give up the convenience of unlimited free parking for the joys of walking. See generally Bill Bryson, "Why No One Walks", The Daily Mail, May 1997 (republished as chapter 26 in his 2000 book, "I'm a Stranger Here Myself: Notes on Returning to America After Twenty Years Away").

If gasoline remains plentiful and reasonably priced, the odds of the 'death of fringe suburbs' are most likely reduced (I ran a thread on that a while ago, no need to [-]harp on[/-] repeat it). However, I think there's a good chance gasoline will become unreasonably expensive and/or scarcer in my lifetime. We'd like to become less dependent on our cars, so we think we'd like a more urban, walkable area anyway - though we can't afford central downtown in any major city of interest. And the same gasoline issues may kill off remote communities/cities in favor of larger metro areas - but we want to be near lots of cultural & medical options as we get older, so larger metro areas appeal to us anyway as well.

Americans have radically and suddenly changed their habits WRT cars several times before in 1974 and 2006 or thereabouts, though they switch back almost as far (Hummer died in the last one) and as suddenly. There are more better small cars now than ever before, even some made in the USA now. And hybrids have a toehold in the market now.

From our personal perspective, there's little downside whether 'death of the fringe suburbs/cities' comes to be in our lifetimes or not.

 

[Milton]

Any urban environment that is relatively quiet, clean, walkable and safe is going to be way too expensive

Ziggy, are you sure you're not over-generalizing? That statement is inaccurate in Canada; and I would imagine that at least some attractive, affordable opportunities are available in the States.

 

[ziggy29]

We'd like to become less dependent on our cars, so we think we'd like a more urban, walkable area anyway - though we can't afford central downtown in any major city of interest. And the same gasoline issues may kill off remote communities/cities in favor of larger metro areas - but we want to be near lots of cultural & medical options as we get older, so larger metro areas appeal to us anyway as well.

I think this pretty much sums up the attraction to "college towns" as a retirement destination. Though they too tend to be pricier than most other towns in their general size and region.

 

[ziggy29]

Ziggy, are you sure you're not over-generalizing? That statement is inaccurate in Canada; and I would imagine that at least some attractive, affordable opportunities are available in the States.

It's mostly true in the US, and when you throw in "with winters and summers that don't totally suck" I think it becomes almost completely true.

 

[Mulligan]

For people who want "walkable" neighborhoods, that is probably true. Truth be told, I find that attractive but for one small problem. The biggest turn-off for me in terms of where I live is *noise*. And the dense neighborhoods in the cities almost never fare well in that category. Not to mention that any urban environment that is relatively quiet, clean, walkable and safe is going to be way too expensive. But there is a certain attraction to not needing a car, and if you can partially offset the added cost of these neighborhoods by eliminating (or greatly reducing) transportation costs, I suppose the math looks at least a little better.

Frankly, my impression of a 55+ community is that it will be quiet -- which is a reason I'm likely to look into those at some point after I reach the age where age discrimination in housing becomes legal.

Im in your camp. Venture off the gated compound once or twice a week to gather supplies and putter around on my golf cart to the golf course or community center the rest of the week. Plus if I do it shortly after turning 55, I can use relativism and consider myself young to all the old people around.

 

[ziggy29]

Im in your camp. Venture off the gated compound once or twice a week to gather supplies and putter around on my golf cart to the golf course or community center the rest of the week. Plus if I do it shortly after turning 55, I can use relativism and consider myself young to all the old people around.

Of course, one of the challenges for me with a 55+ community is that I don't golf and it's my impression that most of them will wind up making me pay for golf facilities I don't use.

 

[REWahoo]

Of course, one of the challenges for me with a 55+ community is that I don't golf and it's my impression that most of them will wind up making me pay for golf facilities I don't use.

You should be able to find one with no golf here: Del Webb: find a home

 

[FUEGO]

I predicted the same thing 10 years ago when I bought my current house on the edge of the central part of the city in an urban area. The trend of building more and more houses 30-60 minutes from "town" couldn't continue forever. Who would want to live way out there and pay those ridiculous prices?

The house we bought is in a gentrifying area and I am still waiting on that gentrification to happen almost 10 years on. We are 2 miles from the "$400,000 teardowns" that people buy, bulldoze, and replace with a 4000 sf mcmansion on a postage size lot in downtown. But in our neighborhood, you can still buy a quarter or third acre lot with 2000-2500 sf house and 2 story detached garage for $100000 (fixer upper) to $160,000 (fixed up). Replacement costs on the structures are probably close to $250-300k.

Still waiting on that gentrification. Apparently local buyers haven't read the article linked to in OP's post.

 

[Texas Proud]

I was lucky enough to live in London and NYC paid for by mega...

Both of these cities were 'walkable' as the weather was not horrible (you can live with the occasinally hot days and the colder winter days)... but the main thing that made them 'walkable' was the mass transit... no place had enough things to do with just walking... most things you had to take a subway or bus and then walk a bit... or spend a LOT of time walking (not something a lot of old people want to do when arthritus might be taking over)...

Also, the cost of the places where I lived were EXPENSIVE... say about $1 mill for a one bedroom place... making a place walkable is expensive... unless it was planned from the beginning...

I do not think there will be a lot of walkable places down in the South... it is just to dang hot... in the middle of the day, when the temp is a 104, you would be soaking by the time you made it to where you wanted to walk....


I think that one of the major things that the writer did not factor in his analysis is the population increase... From what I can calculate, the estimate is an additional 81 million people by 2050.... these people have to go somewhere..... which means that houses that have been built will probably be sold...

 

[martyp]

I live in the East Bay of the San Francisco Bay Area. My house is small so I can't downsize. It's in a nice, relatively quiet neighborhood. House values around here didn't crater during the downturn. I can easily walk to shopping areas in 3 directions. I can walk to buses or BART. I'm walking distance from the University for cultural attractions. There are lots of great places to go within easy driving distance (i.e. went up to the wine country on my motorcycle yesterday). The cost of living is fairly high but since I've lived here for 30+ years it's what I am used to and what we planned for with regards to retirement expenses.

My mother lives in a gated retirement community east of us. It seems very sterile to me. It's hot; uninteresting shopping and restaurants; have to drive everywhere. I can't stand it out there.

 

[Midpack]

Different strokes for different folks...we all have different wants/needs/expectations.