High gas prices compelling more Americans to move closer to urban areas, causing annual growth rate in U.S. cities to surpass that of distant suburbs for first time in decades; 'suburban home prices may not recover in our lifetime,' says economist
April 5, 2012
– Stung by high gasoline costs, outlying suburbs that sprouted in the heady 2000s are now seeing their growth fizzle to historic lows, halting American city dwellers' decades-long exodus to sprawling homes in distant towns.
New census estimates as of July 2011 highlight a shift in population trends following an extended housing bust and renewed spike in oil prices. Two years after the recession technically ended, and despite faint signs of a rebound, Americans again are shunning moves at record levels and staying put in big cities.
That is posing longer-term consequences for residential "exurbs" on the edge of metropolitan areas.
Construction of gleaming new schools and mega-malls built in anticipation of a continued population boom is cutting back. Spacious McMansions offering the promise of homeownership to middle-class families sit abandoned or half-built. Once an escape from urban problems, suburban regions hit by foreclosures are posting bigger jumps in poverty than cities.
The result: The annual rate of growth in American cities and surrounding urban areas has now surpassed that of exurbs for the first time in at least 20 years, spanning the modern era of sprawling suburban development.
"The heyday of exurbs may well be behind us," Yale University economist Robert J. Shiller said. Shiller, co-creator of a Standard & Poor's housing index, is perhaps best known for identifying the risks of a U.S. housing bubble before it actually burst in 2006-2007. Examining the current market, Shiller believes America is now at a turning point, shifting away from faraway suburbs in the long term amid persistently high gasoline prices.
Demographic changes also play a role: They include young singles increasingly delaying marriage and childbirth and thus more apt to rent and a graying population that in its golden years may prefer closer-in, walkable urban centers.
"Suburban housing prices may not recover in our lifetime," Shiller said, calling the development of suburbs since 1950 "unusual" and enabled only by the rise of the automobile and the nation's highway system. "With the bursting of the bubble, we may be discovering the pleasures of the city and the advantages of renting, investing our money not in a single house but in a diversified portfolio."
The signs of longer-term bust are evident in places such as Kendall County, Ill., an outlying suburb of 116,000 people located about 50 miles southwest of Chicago. The nation's No. 1 fastest-growing county from 2000 to 2010, Kendall was part of an exurban wave that more than doubled Kendall's population and helped lift GOP presidential candidate George W. Bush to victory in 2004, offering Republicans the hope of a new era of conservative voters sprouting on the rural-urban edge.
By the late 2000s, however, Kendall County's growth began to wane amid recession and rising gasoline costs. The county, like many other exurbs, eventually turned to Illinois Democrat Barack Obama in the 2008 presidential race for economic answers. By 2011, Kendall County's annual growth had stalled further at 1 percent, dropping its county growth-rate rank to 236th.
Things were especially turbulent over the past 10 years for real estate agent George Richter, who has worked in Kendall County for more than two decades.
"New home construction couldn't be built fast enough," he said. "A lot of us in the industry were very, very nervous about how fast and large the annual growth rate and property value were. We knew there's no way that something could continue on." Now, he said, there's little new construction.
Jeff Wehrli, a longtime Kendall County board member who runs an excavating company, said the signs of the slowdown are most apparent from devalued homes, foreclosures and a general uncertainty among residents.
"It's going to take a while," he said, speaking of a local recovery that he acknowledges will never reach the same levels as last decade. "Our economy has got to get back to the point where people can confidently sign off on a 40-year mortgage."
About 10.6 million Americans reside in the nation's exurbs, just 5 percent of the number in large metropolitan areas. That number represents annual growth of just 0.4 percent from 2010, smaller than the 0.8 percent growth rate for cities and their surrounding urban areas. It also represents the largest one-year growth drop for exurbs in at least 20 years.
By comparison, in 2006 exurban communities grew at an annual rate of 2.1 percent, compared with a population loss of 0.2 percent for inner cities.
In all, 99 of the 100 fastest-growing exurbs and outer suburbs saw slower or no growth in 2011 compared with the mid-decade housing peak — the exception being Spotsylvania County, Va., located on the outskirts of the Washington, D.C., metropolitan area, which has boomed even in the downturn. Nearly three-fourths of the top 100 outer suburban areas also saw slower growth compared with 2010, hurt by $3-a-gallon gasoline last year that has since climbed $1 higher.
Other areas showing big slowdowns are Pinal County outside Phoenix; Barrow, Paulding and Pike counties near Atlanta; Union and York counties outside Charlotte, N.C.; and Sandoval County near Albuquerque, N.M.
"The sting of this experience may very well put the damper on the long-held view among young families and new immigrants that building a home in the outer suburbs is a quick way to achieve the American dream," said William H. Frey, a Brookings Institution demographer who analyzed the census data.
Over the past decade, the number of poor people living in the suburbs of major metro areas grew 53 percent, compared with 23 percent in cities. Suburbs were also home to roughly one-third of the nation's poor population, outranking cities and rural areas.
The latest census data come amid an overall U.S. growth rate in 2011 of 0.9 percent, the lowest since the mid-1940s, due to fewer births and less immigration following the recent recession.
Fewer people are also moving around within the nation's borders — just 11.6 percent of the nation's population moved to a new home, the lowest since the government began tracking such information in 1948. That means fewer Americans are migrating to residential hot spots in the suburbs or Sun Belt metro areas such as Las Vegas, Phoenix and Atlanta, upending several of the population trends of the 2000s.
Metro areas showing renewed growth or slower losses last year included Los Angeles, Miami, Seattle and Detroit, where steep population drops in the downturn have largely bottomed out.
—Rural counties just beyond the edge of metropolitan areas saw growth drop sharply last year, hurt by the slowing of outward sprawl. From 2010-2011, these counties increased by 30,000 people on average, compared with annual growth of 174,000 in the 2000-2010 period, according to Kenneth Johnson, sociology professor at the University of New Hampshire.
As a whole, nonmetropolitan areas last year grew 0.1 percent, compared with 0.9 percent for large metro areas and 0.6 percent for small metropolitan areas.
—Charlton, Ga., led the nation last year as the fastest-growing county, followed by St. Bernard Parish, La., both increasing more than 10 percent. That is in contrast to the 2010 census, when St. Bernard Parish ranked last in percentage growth, due primarily to the effects of Hurricane Katrina.
—Texas had four of the nation's fastest-growing large metropolitan areas: Austin, San Antonio, Dallas-Fort Worth and Houston.
—Los Angeles was the most populous county, with 9.9 million residents.
The census estimates used local records of births and deaths, Internal Revenue Service records of people moving within the United States and census statistics on immigrants. The estimates were for both counties and metropolitan areas, which include cities and surrounding suburbs.
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