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5 trends shaping the future of suburbs

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A new report by the Urban Land Institute and RCLCO dispels common assumptions about the ‘burbs

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Urban cores and downtowns may see most of the press, but for the foreseeable future, suburbs will be where population and job growth are happening in the United States. According to Housing in the Evolving American Suburb, a report by the Urban Land Institute and RCLCO, these areas have been and will continue to be the country’s centers for growth; from 2000 to 2015, suburban areas accounted for 91 percent of the population growth in the nation’s top 50 metropolitan areas.

During the postwar boom, many argued that suburban growth must come at the expense of cities. But during the last decade, that assumption, and many others, have proven to be incomplete or incorrect, according to Stockton Williams, executive director of the ULI’s Terwilliger Center for Housing. Suburbs and cities have grown sympathetically, fueled in large part by the dynamism of regions outside of downtown. The Americans living outside urban areas are both younger—85 percent of those under 18, and 75 of those 25-34 live in suburbs—and more diverse, accounting of 76 percent of the nation’s minority population.

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“Suburban housing dynamics increasingly reflect some of the most profound issues shaping our society, including aging, immigration, economic mobility, and evolving consumer preferences,” says Williams. “As a result, suburbs will generate substantial residential development and redevelopment opportunities and challenges in the years ahead.”

Here are five important trends that will help shape the future of suburban development:

Today’s generation gap in homeownership may lead to tomorrow’s housing glut

It’s common knowledge millennials own homes at a significantly lower rate than older generations. When asked, many express a desire to own a home when their financial situation improves, but some researchers fear that millennial homeownership will continue to lag behind for the next few decades, even as the Baby Boomer generation (or their estates) begin to sell off their homes en masse (many homes currently owned by older Americans also aren’t built with aging in place in mind). Unless more millennials begin to make the leap into ownership, the housing market may be crowded with older inventory, depressing prices.

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Can builders figure out the affordable starter home?

Constantly rising housing costs have put a squeeze on homebuilders. Regulations, impact fees, neighborhood opposition to new construction, and the rising cost of land, labor, and materials have made the economics of an affordable home harder than ever to figure out. That’s lead many homebuilders to focus on the higher-end market, where there’s still a decent profit to be made, making it even harder for younger buyers, who often carry student loans burdens and need to navigate a more challenging credit market. These factors have pushed the number of first-time homebuyers down to 32 percent in 2015, the lowest level since the late ‘80s. Low-cost, no-frills home models, rental housing, and developments on more and more distant sites offering some options for those seeking starter homes, but there doesn’t seem to be any big breakthroughs on the horizon.

Suburbs are increasingly reflecting America’s racial diversity

Many demographic studies have charted how our suburbs are becoming more and more colorful, welcoming large numbers of minorities and recent immigrants. An analysis of large U.S. metropolitan areas by University of Minnesota professors Myron Orfield and Thomas Luce cited in the report concludes that “suburban communities are now at the cutting edge of racial, ethnic and even political change in America.” Orfield has gone so far as to say that the rapid change in the composition of these areas suggests “a degree of declining racial bias and the partial success of fair housing laws,” though that progress is fragile. Another interesting observation about suburban diversification is the role new immigrants may play in reducing the excess of multi-family homes members of the Boomer generation are expected to put on the market over the next few decades. Many of these residences make a great fit for multi-generational households, which are more common among immigrants.

Suburban house with solar panel Shutterstock

Can suburban sprawl go green?

Here’s a scenario you don’t hear often: sprawling suburbs lined with single-family homes may become more environmentally friendly. The report notes how technological changes, such as electric vehicles and autonomous cars, may help mitigate the climate impact of long commutes and decentralized living away from downtown, while increased installation of home solar systems may help make more and more single-family homes sustainable or even carbon neutral. California already requires that all new homes built in 2020 or afterwards be net zero energy; what better place to start stacking solar panels than suburban rooftops?

The urbanization of the suburbs

Cities may be hot, but they’re also expensive, leading many to forecast a wave of new suburban centers built with urban amenities, such as walkable neighborhoods, more dense main streets, and mass transit connections. Older suburbs and master-planned communities with pedestrian-friendly cores are increasingly finding favor, though the “urbanization” of suburban areas often leads to the same types of rising prices and gentrification seen in hot downtown neighborhoods.