The End of the Suburbs: Where the American Dream Is Moving (21 page)

But the migration of wealth from suburb to city started well before Wall Street concocted the no-income, “no-doc” loans that led to the housing crisis. Cities’ renaissance started as early as the mid-1990s, urban housing prices have been rising since 1980, and crime rates have been falling for almost as long. Toll Brothers started moving into the New York City market in 2003. The trend might have been accelerated by the housing crisis, but it was happening already.

Home valuations are now reflective of the shift inward. Christopher Leinberger, analyzing data from the online real estate database Zillow, found this to be the case by comparing real estate prices in center cities and inner suburbs with their far-out suburban counterparts in the late 1990s and today.
In the late 1990s, when measured per square foot
, wealthy outer suburbs contained most of the expensive housing in the United States. Today, the most expensive housing is in center cities and inner suburbs. In Seattle, for example, in 1996 the price per square foot in suburban Redmond was equal to Seattle’s Capitol Hill; today, valuations in Capitol Hill are almost 50 percent higher. In Columbus, Ohio, prices in 1996 were highest in Worthington, and values were 135 percent higher than Short North, a neighborhood near the city’s downtown. Today, Short North prices are 30 percent higher than Worthington’s, while the highest prices of all are in downtown Columbus. In Denver, home prices in Highlands Ranch, a master-planned community twenty miles south of downtown, were 21 percent higher per square foot in 1996 than Highlands, a neighborhood next to downtown Denver. Now Highlands’ valuations are more than 60 percent higher than Highlands Ranch’s. “Simply put, there has been a profound structural shift,” Leinberger wrote in the
New York Times
, “a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.”

A new kind of Great Migration is taking place. Rather than a cyclical phenomenon, many are suggesting these trends taken together, combined with the demographic shifts in the makeup of our population, signify a permanent shift. “The suburban project is over,” says the author James Howard Kunstler. “The people who deliver suburbia—the realtors, the production builders, the mortgage originators—are kicking back waiting for, quote, ‘the bottom’ to kick in so they can resume doing what they were doing. It’s a vain hope.”

That may sound extreme, but just looking at Toll Brothers’ activity alone shows that something is afoot. While we chatted on the phone, CEO Yearley—a man who has a framed proverb on his desk that reads “You can buy more land in an afternoon . . . than you can get rid of in a lifetime”—told me the company had ceased operations in some of the most remote areas it ventured into during the height of its expansion. “We have completely shut down and mothballed the Poconos and West Virginia,” he says. “They’re too far out right now. Maybe one day we get back there.” That means Toll is completing whatever homes it sold in those markets and isn’t developing new communities there right now. Toll doesn’t build homes unless they’re sold, so it doesn’t have an inventory problem there; it’s just not expanding outward.

That said, Yearley still thinks there will be a strong market for what he calls the “suburban move-up” home buyer—the upwardly mobile young family that still wants to live in a subdivision. “I think for most families, once the kids hit kindergarten, most people still want to move to the suburbs and have their own home with their own backyard with the swing set and the little league team playing down the road and with a great school district,” he says. And unlike people like Kunstler or Chuck Marohn in Minnesota, Yearley thinks there will one day be a revived market in some places where the company has stopped expanding, if only because there’s limited land available. “That ‘next frontier’ went away,” he said. “It will come back.” Yearley describes these changes—the company’s move into cities and the cessation of expansion plans in remote markets—as a “shift, but not a monumental shift.”

Even so, Toll’s mix of what it sells to whom is changing. Those “suburban move-up” homes used to constitute 70 or 80 percent of the company’s business, Yearley says; today they’re about 50 percent, with the other half coming from a combination of city-suburban townhome developments, active adult communities, and pure urban developments like its new projects in New York City.

And the success of the company’s New York properties has surpassed even Yearley’s own expectations. “I would have never thought we’d be building that building at Twenty-eighth and Park Avenue South,” he says. “I would have never thought we’d be building at Sixty-fifth and asking twenty million dollars for a penthouse.” All told, with the new plans including the hole in the ground on Park Avenue South, Toll Brothers had close to thirty separate buildings in the New York City market when I spoke with Yearley in late 2012. Before we hung up, he told me there were plans for close to a dozen more.

7

THE FUTURE

With your head full of brains
and your shoes full of feet, you’re too smart to go down any not-so-good street.

—DR. SEUSS,
OH, THE PLACES YOU’LL GO
!

Even as he has led the movement against sprawl, even as he colorfully lambasts the people and policies responsible for it, Andres Duany freely admits he sees the objective benefits of suburban living. He likes to tell the story of how, when he was first setting up his planning firm in Coral Gables, he asked to commute home with his landlord, a guy in his thirties who lived in South Florida’s outer suburbs, to see what it was like. The commute itself was “awful, awful, awful, awful,” Duany says. They were stuck in horrendous traffic, the sun was setting in their face, and the drive seemed to take forever. But, as Duany describes it, once they pulled into the “semi-gated” community and arrived at his home, it was “complete heaven” inside. There were tall ceilings, a refrigerator full of “cool-looking things to eat,” a long, welcoming L-shaped couch, a big TV, sophisticated lighting, cozy rugs, good acoustics, and more. Duany says he realized in that moment that when people say they like the suburbs, what they like is what he calls the private realm. “The private realm is objectively fantastic,” he says. He understands why so many people want to live that way. “It’s very appealing.”

It
is
very appealing, and it’s why most Americans still live in the suburbs. We are a nation that values privacy and individualism down to our very core, and the suburbs give us that. But somewhere between leafy neighborhoods built around lively railroad villages and the Inland Empire, where two-thirds of residents have to drive ten miles to reach a central business district, or shiny new subdivisions in cornfields near Iowa that bill themselves as suburbs of Chicago, we took our wish for privacy too far. The suburbs overshot their mandate.

The modern American suburbs were a product of many things: a booming middle class, the early wonder of mass production and the automobile, a heavy assist from federal housing policy, and spring-loaded, pent-up demand for housing after the war. When you’re in a rush to solve a problem, you look for the most efficient solution, and in this case the easiest, most efficient solution was the suburbs.

But things have changed, and many factors—from the resurgence of cities to rising gas prices to our fast-changing household demographics—are lining up that point to the end of the suburbs as we know them. It’s not overstating it to say that we are at the beginning of a transformational shift in our landscape, one as big as or bigger than the shift that took place immediately after World War II.

There is a group of authors, scholars, and demographers who say this is all a bunch of hogwash, that the suburbs are not changing or losing favor in any way. Americans love their suburbs, these critics say, pointing out that while suburban development was encouraged by the government, government leaders were simply following demand.
Joel Kotkin
, executive editor of the Web site Newgeography.com and author of the 2010 book
The Next Hundred Million: America in 2050
, is one of the most prolific of these critics. Kotkin’s own analyses of census data show that it’s suburbs, not cities, that posted most of the household growth in the United States from 2000 to 2010. He also cites preference studies that show that everyone—even millennials—wants single-family houses in the suburbs. But those on the urban side of the debate say that Kotkin includes many urban hubs in his definition of suburbia. The census definitions he uses, they say, define places like New Jersey’s Hoboken and Jersey City as suburbs—metropolises in their own right whose growth might offer more proof of the increasing popularity of cities.

The debate is complicated by the fact that it’s hard to define much of the American landscape as strictly one or the other. Our cities and suburbs are such a patchwork that for every study that proves one point on this topic, there’s another that proves the opposite. Add to that the fact we’re still recovering from a housing crisis—which makes census data even more difficult to analyze because our migration patterns were so exaggerated during the years of both the boom and the bust—and you’ll see why for every statistic-backed expert assertion there seems to be some other expert claiming fallacy.

The critics are right about one thing, though: we do love our suburbs. And many residents are fiercely protective of them. Andres Duany says he has met people who think he’s crazy when he asks them if they would prefer living in a denser community. “They look at me and say, ‘Why would I want to know my neighbor? Why would I not want to drive my child everywhere? That’s the only time I ever get to see them.’” When he once suggested eliminating drive-through restaurants, a suburban mother stared at him point-blank and asked him: “Have you ever tried to take a baby out of a car seat?’”

So while some people might ridicule cul-de-sac life, others wouldn’t have it any other way. For example, the car-to-car trick-or-treating tradition described in chapter 3 that Annette Lee and her family experienced when they lived in suburban Boonton Township, New Jersey, might not be for everyone, but Lee and most in her community who participated in it loved it. It ended up becoming a social event for the parents, who drank wine (the nondrivers anyway) and decorated their cars, and the kids collected much more loot than they would have otherwise been able to given the large size of the lots in the community. Lee now lives in a different community with similar zoning, but she still loves her setup. “We always look for the bigger the lot the better,” she says, noting that her husband in particular likes the privacy a large-lot setting affords. “He wants to be able to wash his car without having all the neighbors looking at him,” she says. Even though they’ve been in their community for five years, Lee says she and her husband don’t know many of their neighbors well enough to do anything more than wave and say hello. But she points out that she knows a lot of people who live in town house developments, and they don’t know their neighbors, either. And she doesn’t mind one bit having to drive to go to the grocery store. Even if she could walk to one, she points out, shopping as she does for her family of seven, “what am I going to do—carry all my groceries?”

Gary Cooper has a unique perspective. A retired broadcast producer who grew up in Harlem and relocated to the suburbs of Kansas City—where, he says, what “used to be farms and cows is now all upper bracket subdivisions”—he loves suburban life. “It is like living in Nirvana,” he says. “You drive up to the bank, drive up to the cleaners, drive up to the pharmacy, and everyone smiles and says hello . . . they have more Pilates and yoga classes than Carter has liver pills, and you can park anywhere.” Since Johnson County, where he lives, is the richest in the state, its school district is one of the highest ranked. “I must admit,” he says, “the quality of living is quite outstanding.”

To get a sense of the vitriol thrown at those who question the viability of suburbia, just scroll through the comments on any article about the subject.
A recent public radio story
about the looming demographic changes that threaten suburbia’s growth drew some fiery responses. “Suburbs are only ‘dull and boring’ if you are lazy and unimaginative,” wrote one listener. “
I can get to the city when I need to
, and leave it when I need to . . . and I will never, ever have to worry about being stuck in a ‘hipster enclave’—hipsters hate suburbs. If that’s not a reason filled with win, I don’t know what is. Viva suburbia!” Chimed in another: “What gives with the suburbs being ‘soulless’? The people who live in the burbs feel the same level of connection as the people in the city. What does that statement mean for rural people? Would they be soul-less-less?”

Christopher Leinberger, the author and scholar and one of the most influential voices in the city-suburb debate, has been called an elitist and a socialist for his pro-urbanist positions. Even rabble-rouser and anti-sprawl proselytizer James Howard Kunstler acknowledges that the suburban status quo is a mighty force. “So many generations of Americans are used to it, and it has become so normal, that there’s going to be a tremendous struggle to maintain it,” he says.

These struggles are already playing out in many places as communities attempt to make changes. The resistance is particularly vocal in the Washington, DC, area, perhaps because the region is leading the country in efforts to urbanize its suburbs. In Maryland, a showdown is going on between not-in-my-backyard suburban residents and the local government, which has approved the construction of a $1.6 billion new light rail line that would connect Bethesda and New Carrollton.
In Prince George’s County
, residents are fighting a new town center that would include a Whole Foods despite the fact that it would bring hundreds of jobs to the area.
In Lower Merion, Pennsylvania, meanwhile, during a debate
over rezoning the town’s main commercial strip to accommodate apartment towers, some residents said they objected because it didn’t “fit their image” of suburbia.

A more legitimate argument than any of these might be that we are a free market, and suburban living is what many people choose. Even as the government was putting in place the policy building blocks that would push the country toward a suburban settlement pattern, we devoured and demanded more of it. “This is a free country,” says Leinberger. “We wanted it. This was a market-based trend.” The American home-building industry is perhaps the most responsive consumer-product industry of all, with an uncanny ability to read and deliver what its customers want—and, for the most part (the Wall Street–generated demand of the housing crisis notwithstanding), it builds houses that are in direct response to what Americans are asking them for. So in many ways, like it or not, the suburbs are a reflection of us.

•   •   •

B
esides, if the suburbs as we know them are over, then what on earth will the future look like? It’s hard to tell what the country will do because we are still, as of this writing, only starting to emerge from an epic housing freeze. Household formation is picking up, but it’s still much lower than it needs to be, and for all the talk about where Americans are moving, we’re not moving anywhere right now. New single-family home construction is still way off from its peak. We have the lowest level of migration since the end of World War II.

Even so, after so many false starts, a housing market recovery is beginning to take real shape. Starting in late 2012 and continuing into 2013, sales of both new and existing homes showed signs of rebounding, while inventories have come down significantly and home prices seem to be on their way up from the bottom. The annual builders’ show in 2013 in Las Vegas stood in marked contrast to the show in the dark days of February 2012 when Aron Ralston spooked the crowd. This year, the mood was one of hopeful optimism; the attendees arrived in Las Vegas just as positive data came out showing that
single-family housing starts had climbed
18.5 percent in December and
new home sales were on track
for a 20 percent–plus increase over 2011’s rock bottom. Vendors showed off high-tech gadgetry like hands-free faucets, touch-screen dead bolts, and elevators aimed at multigenerational households. Learning their lesson from last year, the conference organizers went in a sunnier direction, securing Michael Eisner, the former CEO of the Walt Disney Company, as the keynote speaker, and ordering up a comedic performance by the political satire troupe the Capitol Steps.

But things are still far from rosy, and where the market heads when things kick back up again is the billion-dollar question. There is almost unanimous consensus that a higher proportion of building is likely to be closer to centers of jobs, entertainment, and lifestyle needs. You can glean some indication of this by looking at the current bright spots in the housing market.
One of the hottest areas is in multifamily
construction—the market for apartment and condo buildings and other structures containing four or more housing units, whether in cities or in suburbs. Construction of this kind of housing has more than doubled since the housing crisis set in. Part of this growth is due to a boom in the market for rental housing.
The number of renters surged by more than five million
in the 2000s, the largest ten-year increase since World War II. Vacancy rates are down and rents are soaring across the country, even in markets with lots of foreclosures. The vast majority of multifamily housing starts these days are rentals, whereas in the height of the housing crisis they were predominantly condos for sale.

Meanwhile, the urbanization of the suburbs has only just begun. It’s not just New Urbanists and other urban or “green” activists that are preaching this idea. Traditional planners, academics, and even home builders and real estate developers are coming to this way of thinking, too, as evidenced by the hundreds of walkable developments going up around the country—many being planned and developed by the biggest traditional home builders. Whether it’s a massive town center complex like Rick Caruso’s mega-centers in Los Angeles, or traditional villages based on 1800s town planning principles, or
Toll Brothers’ recent plans
to build a seven-story luxury condo building in downtown Bethesda, Maryland, three blocks from the train station, there has been a shift in the residential development world away from distance and toward proximity. Even though almost no one walks everywhere and you will likely still have to get in the car, in places like these it becomes a matter of driving a mile or two instead of ten or twenty; or maybe it means a household can own one car instead of two. Shyam Kannan, formerly a principal at real estate consultancy Robert Charles Lesser & Co. and now managing director of planning at the Washington Metropolitan Area Transit Authority (WMATA), describes this as an entire paradigm shift in real estate. “We’re moving from location, location, location in terms of the most important factor to access, access, access,” he says. People in the industry insist this is more than a trend; it is a lasting transformation.