11 August 2010

Smart Money Follows Smart Growth

...the previous model was based on the assumption that the United States could prop up the single family home in a distant location by keeping the cost of oil and mortgages low. But that era is over. "The true cost of transportation and housing is going to start to surface," ...

...Boomers are eager to liberate themselves from the maintenance of house, lawn and car ... They want necessities within walking distance because they know they will not be able to drive forever.

... "Cities need to understand that a great city needs a mix of housing. It creates dysfunction when workers are required to live at great distances," he said.

...Now citizens with real estate savvy are honing in on the cities. Unlike the suburbs, and despite the downturn, homes closer to downtowns tended to retain their value...

In 15 of 20 major housing markets, such as New York City but also Milwaukee, Wisconsin and Durham, North Carolina, higher home prices correlated with proximity to the city center and its restaurants, parks and libraries.

More specifically, walking distance to those amenities generates a home price premium in the range of $4,000 to $34,000, according to a 2009 study of 90,000 homes ...

...Residents of communities like Sacramento and Rockville are ponying up for the urban privilege of public transportation in their own backyards.

... governments reap much more in taxes from urban centers than from malls or "big box" retail like a Wal-Mart, but pay more to build suburban infrastructure such as sewers and streets.

In the city and county of Sarasota, for example, 3.4 acres of urban residential development consumes one-tenth the land of a multi-family development in the suburbs. But it requires little more than half of the infrastructure investment and generates 830 percent more for the county annually in total taxes: that's $2 million from the city structure and $238,529 from the suburban one.

What's more, suburban housing takes 42 years to pay off its infrastructure costs. Downtown? Just three. ... "These (city) centers produce a tremendous amount of revenue and then hemorrhage it out to the suburbs," ... "We don't have a rational discussion on the true costs of the way we manage land."

....cash-strapped governments struggling with the recession's hit to tax revenue are starting to press developers to share the pain of paying for highways and other infrastructure...

As a result, profitability will come to depend on higher-density construction, said Rich,.."Just as they evolved to start, they will de-evolve the product," he said, of suburban developers.


Anonymous said...

Well, now that it's 2010, I suppose we're into our FIFTH decade of "the suburbs are dying, people can't wait to move back downtown." But it never seems to happen. There will always be some age 55+ couples/singles who move back, and some post-college folks who do, but the vast, vast majority of married people with kids between ages 30 and 55 have zero desire to live anywhere close to the central city.

BTW, I've been to Rockville before, it's more akin to Blue Ash on steroids than it is to downtown Cincinnati. It's basically a suburb of DC.

5chw4r7z said...

cooltownstudios.com had a similar story http://tinyurl.com/284chfo
Big box retailers pay are disproportionately small amount of property tax while businesses in mixed urban 3 to 5 story developments pay up to 25 times as much property tax.

Anon, we'll see how you feel if you ever have to pay the true cost of driving. its all fine and dandy with your socialist highways, but those days won't and can't last.

CityKin said...


This article was not about downtowns, it was about "smart growth" or "new urbanism". No one claimed that Rockville was like downtown Cincinnati.

And no we are NOT in the fifth decade of claiming the suburbs are dying. Maybe the fifth year. People have long claimed that they are bland but that is quite different than saying they are dying. If you haven't noticed a national change in suburbs over the past few years, I think you are not paying attention.

Your claim that people between ages 30-55 want to live as far away as possible is not true, as shown by property value declines in those outlying areas. Time will tell, but I think long term, the smart money is with closer-in living.