The Option of Urbanism: Investing In A New American Dream
copyright 2009 Christopher Leinberger, 176 pages
Author Christopher Leinberger lays out the history of suburban development in the United States, and how we got to the point where nearly all new development has been “big-box” retail, “power centers,” and “large-lot” homes. In addition to his analysis of “drivable sub-urban” and “walkable urban” development, Leinberger weighs in on the causes of the 2008 recession.
Simply put, after World War II, the United States entered a phase of massive economic growth and embraced the “drivable sub-urban” development model with gusto, to the exclusion of other types. This type of development is familiar to us all: low density, large lots, acres of asphalt parking lots in front of chain big-box retail, restaurants, and office parks. A car is virtually required to get around, as the low density of development makes public transportation unfeasible, and the distances and interruption of freeways and multi-lane highways make biking and walking unpleasant, inconvenient, and often dangerous.
In contrast, “walkable urban” development is largely just returning to a more localized way of living, wherein people don’t need a car to live day to day. Walkable urban development has been the standard worldwide for centuries because people had no choice but to work and shop within, say, a quarter-mile to a half-mile from home.
The story gets more interesting when Leinberger addresses the link between the recession of 2008 and the “structural change” in how we build and develop. The “built environment” represents about 35% of our total economy—the largest single chunk. The recession of 2008 coincides with the “structural change” of public preference shifting from primarily drivable sub-urban development to walkable urban development. In other words, the shenanigans in finance and real estate popped the bubble at the time that the public’s preference towards walkable urban development was reaching critical mass.
To be sure, drivable sub-urban development will continue to be built, and walkable urban development never completely went away. But now we know that drivable sub-urban development has done poorly in the recession, losing value, while walkable urban development has done fairly well. There is massive over-supply of drivable sub-urban property, and great demand for walkable urban property, leading, of course, to falling prices in suburbia and rising prices in the urban neighborhoods.
Leinberger references Arthur C. Nelson, professor at the University of Utah:
“There were 54 million large-lot single-family houses in 2000 and Nelson projects that upward of 22 million will not find ready buyers when it comes time to sell, which implies much lower prices.” This is the market at work.
With a surplus of obsolete drivable sub-urban housing now and for the next few decades, our society faces a few associated problems. When people fled the cities for suburbia, they left behind housing stock that was constructed more robustly than most suburban homes of today, which have been “value engineered” to look impressive from a distance, but which almost certainly will not endure over time. Vinyl and hardboard siding, vinyl windows, cheap asphalt shingles, low-end furnaces and air-conditioning units, vinyl flooring, and drywall and chipboard walls are not going to last like the housing stock built in 1915. These will be high-maintenance homes.
And because of the low density of suburbia, public transportation is not very cost-effective and so mostly non-existent, so residents need cars to get around. When gasoline prices rise, driving becomes even more expensive. So the housing itself may become cheap, but maintaining it, and getting to and from work and shopping, will become relatively more expensive.
If sub-urban housing loses more and more value, people stop maintaining it, as there’s no financial incentive to spend money on a house that you cannot recoup at the time of sale. That causes financial pain for homeowners, as their largest asset stagnates or declines in value; for banks, as lending for a depreciable and hard-to-sell asset may not make sense; and for municipalities, as the tax base shrinks and needed services go unfunded.
In the past, families with children drove demand for sub-urban housing. However, families are projected to decline to only about 25% of U.S. households in 2040, and few people without kids will want a large-lot house in suburbia. As always, demographics is destiny, and the shift from drivable sub-urban development to walkable urban development has the potential to be painful for suburbia.
Leinberger concludes with five steps he says are necessary for walkable urbanism to thrive across the country. The details can get a bit dense, so I’ll summarize:
1. Zoning must change to support mixed use development.
2. Financing must adapt to the challenges and opportunities of walkable urban development.
3. Government must end subsidies for drivable sub-urban development.
4. Government must invest in walkable urban infrastructure, such as rail transit.
5. Government must intensively manage walkable urban areas to ensure that it’s done properly.
While reading this account, I began to wonder where the opportunities will be found, and to consider a niche for some large-lot sub-urban homes. Do they have the potential for supporting self-sufficiency? It seems to me that an industrious family, for example, could create a market garden, woodshop, or other home business on their one-acre sub-urban lot. I’m not the first to consider this possibility, of course, but it’s interesting so I’ll come back to it in another blog post.
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