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Reversing The Trend: Urban Growth in America

It was good while it lasted, suburbia.

After a 91-year rule, suburban life has been pushed off its throne by a preference for city living. For the first time since 1920, most large American city centers are growing faster than their suburban counterparts.

U.S. census data shows in 33 of the nation’s 51 largest cities, city centers grew faster than suburbs in 2011. Overall, the population of city centers (in U.S. cities of over 1 million) grew by 1.1 percent in 2011, while the surrounding suburbs grew by only 0.9 percent.

So why has a 91-year trend suddenly reversed course?

Reason 1: Deindustrialization of central cities

Urban Growth

Downtown living wasn’t always so luxurious.

Large-scale factories began moving out of American city centers in the latter half of the20th century, says Alan Ehrenhalt, author of “The Great Inversion and the Future of the American City”, in a New Republic article. As manufacturers left American downtowns, many of the related problems also left the area.

“Manhattan may seem like a loud and gritty place now, but it is nothing like the city of tenement manufacturing, rumbling elevated trains, and horses and coal dust in the streets that confronted inhabitants in the early 1900s,” Ehrenhalt points out.

urban growth

Urban growth is outpacing suburban growth for the first time since 1920.

The absence of tenement housing and factory grime has inspired the revitalization of many downtown areas. As environmental and safety conditions have steadily improved, the demand for downtown offices and housing has also climbed.

Reason 2: High gas prices

High commute costs are a big incentive for many to live in city centers. In cities like Seattle, for example, residents could save big bucks (an estimated $11,682 annually) by skipping a long commute (American Public Transportation Association).

“Rising gas prices definitely will affect people’s decisions about where to buy and quite possibly even the decision whether or not to buy at all,” notes California real estate agent Patricia Kramer in a article.

Reason 3: Changing values and preferences

Recent demographic changes noted by the U.S. Census Bureau may also driving Americans out of the suburbs. The allure of suburban life seems to be dwindling as the need for large family homes and yards declines.

Is the Trend Temporary?

So will this trend stick? Opinions differ. Some analysts say as the housing market improves, “Generation Rent” will be lured away from downtown rentals and into suburban purchases.

“The real question is, will cities continue to hold their own when the suburban housing market picks up?” says William H. Frey, a Brookings Institution demographer in an AP article.

Others disagree, and predict that downtown living has a bright and permanent future. Yale University economist Robert J. Shiller theorizes America has turned a corner, and is headed straight for the city center.

“Suburban housing prices may not recover in our lifetime,” Shiller said. “The heyday of exurbs may well be behind us.”

Is Suburban Real Estate Dead?

Suburban Neighborhoods for Buyers

The suburbs are still the clear preference of home buyers.

Rest assured: The suburbs aren’t going anywhere. Most suburban areas are still growing, albeit at slower rates.

And don’t forget: The suburbs are still the clear preference of those who buy homes. Between July 2011 and July 2012, 51 percent of homes purchased by buyers were in a suburb or subdivision, 18 percent were in a small town, 17 percent were in an urban area, and 12 percent were in a rural area, according to the National Association of Realtors.

Those who buy will likely still turn to the good schools, large yards, and plentiful housing stock of the suburbs. As rents continue to climb and the economy rebounds, the lure of suburban homeownership will probably strengthen once again.

But suburbia has questions to answer, and improvements to make. High energy costs and a desire for “walkability” aren’t likely to fade. To capitalize on a new generation of home buyers, suburban planners need to provide better access to services and public transportation. Without good answers to these long-term problems, the glory days of suburban real estate may be over.


Photos courtesy of footloosiety, caswell_tom and Cornell University

Posted by Jessi Hall

One Trackback

  1. […] 1920, America’s Urban cities are growing faster than the Suburbs.  This great article by Veterans United points out the top 3 reasons that suburban life has been pushed off its throne by a high preference […]

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Samantha Reeves

Samantha Reeves maintains the Veterans United Realty blog for Veterans United Home Loans, the nation's leading VA-approved lender. As a prior loan officer, Samantha brings her vast experience dealing with the VA home loan all the way from initial application, to loan funding. She knows how the system works and brings you information and tips on how to make your VA home loan transaction go as smoothly as possible.

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