2008 June 21 Saturday
Exurban McMansion Neighborhoods To Become Slums?

Will an aging population, more childless families, and high gasoline prices push affluent people into the cities and drive poor folks out into exurban communities?

Recent market research indicates that up to 40 percent of households surveyed in selected metropolitan areas want to live in walkable urban areas, said Leinberger. The desire is also substantiated by real estate prices for urban residential space, which are 40 to 200 percent higher than in traditional suburban neighborhoods -- this price variation can be found both in cities and small communities equipped with walkable infrastructure, he said.

The result is an oversupply of depreciating suburban housing and a pent-up demand for walkable urban space, which is unlikely to be met for a number of years.

Developers can put up condos and apartment buildings in cities pretty quickly. So I do not see why this demand will be unmet for years unless city zoning prevents new construction.

Will McMansions get converted into multi-family dwellings for the poor?

But as the market catches up to the demand for more mixed use communities, the United States could see a notable structural transformation in the way its population lives -- Arthur C. Nelson, director of Virginia Tech's Metropolitan Institute, estimates, for example, that half of the real-estate development built by 2025 will not have existed in 2000.

Yet Nelson also estimates that in 2025 there will be a surplus of 22 million large-lot homes that will not be left vacant in a suburban wasteland but instead occupied by lower classes who have been driven out of their once affordable inner-city apartments and houses.

The so-called McMansion, he said, will become the new multi-family home for the poor.

I am not convinced by this argument. The most distant suburbs could become residences for those who can telecommute and those who control their own business locations. Developers could build office space in areas where housing is cheap so that companies can site offices where the workers can afford to live. Also, long distant commuters can trade up to compact hybrids and diesels.

But the poor have to wind up somewhere. Seems to me it makes the most sense for the poor to gravitate toward the most run-down inner suburbs while the upper class take over some city cores and other inner suburbs. Some inner suburbs could be built up into higher density housing for the poor with light rail lines to bring them to city jobs.

People who commute from West Virginia to the Washington DC area (amazing!) are seeing big drops in their housing prices.

Sky-high gasoline prices aren't just raising the cost of Eugene Marino's 120-mile (193-kilometer) round-trip to his job in the Washington area. They're reducing his wealth, too.

House prices in his rural subdivision beyond the Blue Ridge Mountains in Charles Town, West Virginia, have plunged as commuting expenses have soared. A four-bedroom home down the street from his is listed for $239,000, after selling new for $360,000 five years ago.

High gasoline prices are nature's way of telling you to not do that.

Some suburbs have amazingly high foreclosure rates.

In the Franklin Reserve neighborhood of Elk Grove, California, south of Sacramento, the houses are nicer than those at Windy Ridge—many once sold for well over $500,000—but the phenomenon is the same. At the height of the boom, 10,000 new homes were built there in just four years. Now many are empty; renters of dubious character occupy others. Graffiti, broken windows, and other markers of decay have multiplied. Susan McDonald, president of the local residents’ association and an executive at a local bank, told the Associated Press, “There’s been gang activity. Things have really been changing, the last few years.”

In the first half of last year, residential burglaries rose by 35 percent and robberies by 58 percent in suburban Lee County, Florida, where one in four houses stands empty. Charlotte’s crime rates have stayed flat overall in recent years—but from 2003 to 2006, in the 10 suburbs of the city that have experienced the highest foreclosure rates, crime rose 33 percent. Civic organizations in some suburbs have begun to mow the lawns around empty houses to keep up the appearance of stability. Police departments are mapping foreclosures in an effort to identify emerging criminal hot spots.

Distant suburbs of LA have seen the biggest drops in housing prices.

Price drops were especially steep in far-flung suburbs. The median price fell 38% in Lancaster and 42% in Palmdale, compared with 23% in Los Angeles County overall.

San Bernardino County saw prices drop by 31%, but it was worse in the remote town of Victorville, where values declined 43%.

Bargains are to be had for those who can telecommute.

Share |      By Randall Parker at 2008 June 21 12:41 PM  Economics Housing

Sean said at June 21, 2008 5:04 PM:

You bet zoning restrictions, building codes, and NIMBY are screwing up the whole thing. Here in Seattle people are even complaining about new mid-rise buildings in neighborhoods already full of them.

JSBolton said at June 21, 2008 6:43 PM:

No one's going to tell you that many far exurban districts have been flooded with illegals, who have dropped off their children on the schools there, cancelling the interest of buyers in those districts. Few will spend the money and time to buy new on the growth edge,when and where schools' student quality is not better than what the buyers' would be moving away from. Developers using illegals, or operating in areas with a lot of them, are quite often in bankruptcy now. If you did enough deportations, the process would be self-correcting, as places using fewer illegals would resume growth further and faster than those which used more.

JSBolton said at June 21, 2008 6:55 PM:

The projection of 3 million units a year might be overstated by 100%. Immigrants are overwhelmingly below the income levels allowing for new construction, therefore what? Either we won't take more of that sort, or far fewer, or cities with post-WWII single-family mass-type housing will see it converted to multi-family. Some suburbs with minority school quality will switch to higher-density use of existing single-family uses. Buses are good enough for that, as penetration is more practical than drawing apartment development towards committed transit lines. This was obvious even in the 1920's.

z said at June 21, 2008 7:35 PM:

It might be a good time to invest in motorcycle-company stock, as some of the long-commuters are obviously not going to move back near the city. A bike that gets 80 miles per gallon is not-so-bad on a 100 mile commute, but a car that gets 20 miles-per-gallon is going to hit you hard. Just think, less than 3 gallons of gas to-and-from work on a 100 mile commute (about 9-10 bucks at today's gas price) vs. 10 gallons in a 20MPG SUV (roughly 35-38 bucks A DAY.....five days a week, YIKES!!!!).

For the time-being, Priuses and motorcycles would be the only feasible way to commute long distances to work. I cannot see anyone short of a millionaire being willing to spend 175 dollars a week in gas.....................but 50 bucks a week is still do-able on the motorcycle. Toyota makes one other model of car that isn't a hybrid (little thing though) that gets close to 50 mpg (or at least they used to) also. High gas prices, if they persist another couple of years, are going to change things big-time in my opinion. People really will shop closer to home, and attempt to live nearer to their jobs..........as an economic necessity.

Personally I'd never live anywhere near a hundred miles from work. Thirty or maybe thirty-five miles would be the absolute upper limit for me. Life is too short to be driving that long every day. Currently I live less than ten miles from my employment, which is wonderful.

Mercer said at June 22, 2008 9:19 PM:

The Bloomberg article chose a poor example for their story. There two MARC Train stations ten minutes from Charles Town. The MARC line goes into DC.

I think anyone who chooses to drive instead of taking the train in that situation is a masochist.

Randall Parker said at June 22, 2008 9:33 PM:


My mind boggles at people who drive an hour to work. I live so close to my job that I walk. I'd hate to spend so much time and money on driving in cars. I can see vacation trips. But long miles daily seems like such a waste of life and money.

Trains to work: Quite a bit better since one can read or do work. But I'd rather have that time to myself at work or at home.

Ned said at June 23, 2008 4:57 AM:

I have a friend who lives and works near Temecula, California. He told me that many people who live there commute to Los Angeles every day - with traffic, about a two hour drive each way. Four hours a day commuting, plus four dollars a gallon gas - yikes! Doesn't sound good to me. But decent housing in LA is so expensive, I guess these folks feel that they don't have any choice.

Randall Parker said at June 23, 2008 6:05 PM:


Why doesn't the friend just move to another state? Why commute so far?

Ned said at June 24, 2008 7:17 AM:

RP -

My friend actually works in Ontario, about an hour away. He regards two hours a day spent commuting as "nothing." Why do his neighbors spend four hours a day commuting? I imagine because they have good jobs in the LA area, but not good enough to allow them to live in a nice area in that city. Why not move to another state? They all seem to really like Southern California. But except for the nice weather, the attraction for that area has always eluded me.

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