The Death of the Fringe Suburb

[begingri]

By CHRISTOPHER B. LEINBERGER

DRIVE through any number of outer-ring suburbs in America, and you’ll see boarded-up and vacant strip malls, surrounded by vast seas of empty parking spaces. These forlorn monuments to the real estate crash are not going to come back to life, even when the economy recovers. And that’s because the demand for the housing that once supported commercial activity in many exurbs isn’t coming back, either.

By now, nearly five years after the housing crash, most Americans understand that a mortgage meltdown was the catalyst for the Great Recession, facilitated by underregulation of finance and reckless risk-taking. Less understood is the divergence between center cities and inner-ring suburbs on one hand, and the suburban fringe on the other.

It was predominantly the collapse of the car-dependent suburban fringe that caused the mortgage collapse.

In the late 1990s, high-end outer suburbs contained most of the expensive housing in the United States, as measured by price per square foot, according to data I analyzed from the Zillow real estate database. Today, the most expensive housing is in the high-density, pedestrian-friendly neighborhoods of the center city and inner suburbs. Some of the most expensive neighborhoods in their metropolitan areas are Capitol Hill in Seattle; Virginia Highland in Atlanta; German Village in Columbus, Ohio, and Logan Circle in Washington. Considered slums as recently as 30 years ago, they have been transformed by gentrification.

Simply put, there has been a profound structural shift — a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.

The shift is durable and lasting because of a major demographic event: the convergence of the two largest generations in American history, the baby boomers [[born between 1946 and 1964) and the millennials [[born between 1979 and 1996), which today represent half of the total population.

Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.

The millennials are just now beginning to emerge from the nest — at least those who can afford to live on their own. This coming-of-age cohort also favors urban downtowns and suburban town centers — for lifestyle reasons and the convenience of not having to own cars.

Over all, only 12 percent of future homebuyers want the drivable suburban-fringe houses that are in such oversupply, according to the Realtors survey. This lack of demand all but guarantees continued price declines. Boomers selling their fringe housing will only add to the glut. Nothing the federal government can do will reverse this.

Many drivable-fringe house prices are now below replacement value, meaning the land under the house has no value and the sticks and bricks are worth less than they would cost to replace. This means there is no financial incentive to maintain the house; the next dollar invested will not be recouped upon resale. Many of these houses will be converted to rentals, which are rarely as well maintained as owner-occupied housing. Add the fact that the houses were built with cheap materials and methods to begin with, and you see why many fringe suburbs are turning into slums, with abandoned housing and rising crime.

The good news is that there is great pent-up demand for walkable, centrally located neighborhoods in cities like Portland, Denver, Philadelphia and Chattanooga, Tenn. The transformation of suburbia can be seen in places like Arlington County, Va., Bellevue, Wash., and Pasadena, Calif., where strip malls have been bulldozed and replaced by higher-density mixed-use developments with good transit connections.

Continued at: http://www.nytimes.com/2011/11/26/op...ge-suburb.html

[detlump]

High gas prices and long commute times will also spell the end of the fringe suburbs. People don't want or can no longer stand 3-5 hours of commuting a day, on top of a work day well beyond 8 hours, it means they get home and have to eat and go to bed to wake up in five hours to start it all again.

[Scottathew]

I live at 10 and Mound, which is an inner-ring burb, and I've been loving the reduced commute.

I know a lot of people I work with that commute 1 hour+ each way, and I just cannot fathom it!

[313WX]

I live at 10 and Mound, which is an inner-ring burb, and I've been loving the reduced commute.

I know a lot of people I work with that commute 1 hour+ each way, and I just cannot fathom it!

Why not live in Detroit?

Wouldn't your commute be even closer?

[313WX]

Detroit will probably be the last place this "death of the fringe suburbs" takes place, considering we're still building infrastructure towards Flint and Port Huron because people can't fathom being even 30 miles or closer to Detroit proper.

If anything, I would expect the folks in the fringe suburbs will either build up their own little cities versus returning back to the center [[see Southfield and Troy) or, if worse comes to worse, move to an already established city.

Either way, it probably won't work in Detroit's favor as much as we would like.

[Scottathew]

Either way, it probably won't work in Detroit's favor as much as we would like.

I agree that Detroit won't be the primary city to benefit, however, there will be some benefit. And as everyone starts moving in closer, regional mass transit will start to make more and more sense.

[Gistok]

Detroit will probably be the last place this "death of the fringe suburbs" takes palce, considering we're still building infrastructure towards Flint and Port Huron because people can't fathom being even 30 miles or closer to Detroit proper.

If anything, I would expect the folks in the fringe suburbs will either build up their own little cities versus returning back to the center [[see Southfield and Troy) or, if worse comes to worse, move to an already established city.

Either way, it probably won't work in Detroit's favor as much as we would like.

Agreed....

And who has a 3-5 hour commute? The longest commutes I know of are folks traveling 1 hour each way, Imlay City to the Warren GM Tech Center, and Marysville to the GM Tech Center. And neither of them said they plan on moving.

If folks are traveling 3-5 hours in metro Detroit it is very very rare, and likely temporary.

[cmubryan]

I live in Huntington Woods [[the 1.5 square mile from 10 to 11 Mile and from Woodward to Coolidge) Homes in this area seem to sell pretty swifly and at not so bottom barrel prices. My neighborhood is much more stable with less foreclosures than my parents neighborhood out in West Bloomfield. While I do not live in the C of Detroit, I can say that my walkable neighborhood is much like a major city neighborhood rather than a typical "suburb" with culdesacs, no sidewalks and open spaces. This area seems to attract those who want to be close to the city without being IN the city. At least that was the appeal to my wife and me. I would love to live in the city in a similiar type neighborhood but unfortunately it just does not exist right now.

[Flintoid]

This will really benefit the more traditionally urban parts of Detroit that are seeing the vast majority of development [[Downtown, Midtown, New Center, Corktown, and Eastern Market, along with Woodbridge to an extent). People want true walkability and these neighborhoods in the city provide that [[as evidenced by the 59% growth in college educated residents under 35 here). More traditional neighborhoods like Indian Village, Grandmont-Rosedale, etc. will continue to rely on strong nonprofits, neighborhood associations, and CDCs. This article bodes very very well for our urban city center however, downtown will be a sight to see in 2020.

[313WX]

This article bodes very very well for our urban city center however, downtown will be a sight to see in 2020.

The health of the national economy is key too. Note the CBDs in other cities saw their revival during the telecommunications and real estate boom. Unfortunately Detroit missed out on both of them.

However, if the economists are calling for more or less stagnant economic growth through 2020, then I don't expect too much to happen in terms of major development for downtown anytime soon. What that means is any true revival of downtown will continue to be painfully slow, more likely than not. Banks aren't going to invest their money into things if confidence isn't high, especially in an area that's overall stagnant/shrinking.

And this isn't even factoring in regional and state factors, nor the impact from Detroit's immiment financial doom. Things such as how fast we can get soem serious mass transit in place and some jobs that provide a decent wage around here will be key as well.

[Don K]

Yeah the key to revitalizing areas of Detroit or areas in the region is some kind of business that will draw in people and stop the overall bleeding of population. And no it ain't gonna be the car industry. Because of globalization of the Detroit Three [[e.g., One Ford), there's permanently lower demand for people in Engineering, Design, Finance, HR, than there was 10 or 20 years ago, so get over it.

If new growth businesses can grow here or can be convinced to locate here, there are lots of places that could be the focus of concentrations of housing in walkable neighborhoods [[i.e., you can walk to restaurants, groceries [[okay maybe not the whole week's shopping but at least essentials), cleaners, etc.). Besides the Detroit neighborhoods mentioned above, there's the whole Woodward corridor south of Quarton, Rochester, Farmington, Plymouth, Northville, Dearborn, Wayne.

[Bham1982]

IMO, the editorial is mostly wishful thinking, especially when you read the author's title/background.

It would be like reading an editorial from the American Sprawl Association making the opposite conclusion. More than a bit biased.

Assuming this editorial is true, can you give me local examples where outer sprawlburbs are dying or dead? Because I can't think of any.

Seems to be that the inner suburbs are [[very generally speaking) declining, and the outer suburbs are comparatively much stronger. And I live and work in an inner suburb.

Over the last 15 years, I've seen the retail around Northland, Oakland, Eastland, Tel Twelve, Universal, Fairlane, Macomb, Westland, Southland, Wonderland, etc. all decline. I can't think of a single inner suburban mall that has held it's ground, unless Somerset is considered inner suburban,

In contrast, the outer suburban retail [[Ford Rd- Canton, Great Lakes Crossing, Twelve Oaks, Hall Road, Rochester Hills, Brigjton, I-275, etc.) has all boomed.

[Bham1982]

I live in Huntington Woods [[the 1.5 square mile from 10 to 11 Mile and from Woodward to Coolidge) Homes in this area seem to sell pretty swifly and at not so bottom barrel prices. My neighborhood is much more stable with less foreclosures than my parents neighborhood out in West Bloomfield.

I don't know if your anecdotes are true or not, but Southern Oakland, generally speaking, has far more foreclosures than West Bloomfield. It could be that your immediate few blocks have a lower rate than your parents' immediate blocks, but I would not then draw bigger conclusions [[i.e. older, walkable suburbs are therefore more healthy).

Huntington Woods has always been a bit of an outlier in South Oakland, and West Bloomfield, in parts, hasn't ever been particularly affluent. And I'm not even sure I would consider WB an outer sprawlburb. WB was pretty heavily developed thirty years ago.

Though I wouldn't be shocked if there were some increased measure of appreciation for walkable, older suburbs, especially among younger folks. I would like to see some data before making bigger conclusions.

[SteveJ]

Pleasant Ridge and Huntington Woods are both areas that withstood the housing bust. They are generally more attractive because of their location and nice old neighborhoods. I live down here and homes are generally not on the market long. If you look at the foreclosure rates, Pleasant Ridge and Huntington Woods both have lower rates than West Bloomfield. I just can't think of a better area in Michigan for the proximity of everything.

[goggomobil]

What this guy wrote about is a little harder to see in the Detroit area because there are so many vacant homes and businesses and many 'inner ring' suburbs also have the lion's share of business. Detroit doesn't really fit this article because many people can easily commute from, say, Milford to Novi or Romeo to Warren.

You can see dozens of stillborn developments that I believe will languish for years to come, like these two in Fenton:

http://maps.google.com/maps?q=fenton...XpG4TKMubW7fUM

http://maps.google.com/maps?q=leroy+...FDzjKa9bO3sqUQ

[313WX]

You can see dozens of stillborn developments that I believe will languish for years to come, like these two in Fenton:

http://maps.google.com/maps?q=fenton...XpG4TKMubW7fUM

http://maps.google.com/maps?q=leroy+...FDzjKa9bO3sqUQ

Oh my, Fenton is considered a suburb now!?

Oy!!!

[goggomobil]

I used Fenton as an example because many people there commute to their jobs in the NW suburbs. I believe that Fenton fits what the NY Times writer is talking about [[the subject of this thread).

Fenton is only a 30 minute drive to Novi... oy.

[313WX]

I used Fenton as an example because many people there commute to their jobs in the NW suburbs. I believe that Fenton fits what the NY Times writer is talking about [[the subject of this thread).

Fenton is only a 30 minute drive to Novi... oy.

No, most were thinking along the line of Rochester Hills, Shelby Township, etc.

But you're somewhat right about Detroit not fitting this article. He meant people making long commutes from the fringe suburbs to the city center, which very few in Detroit do.

That pretty much goes back to my earlier post.

[goggomobil]

No, most were thinking along the line of Rochester Hills, Shelby Township, etc.

Huh? Who is 'most'?

Oh, I get it... you're a troll.

[313WX]

Oh, I get it... you're a troll.

Peopel in glass houses shouldn't throw stones.

Fenton was incorporated in 1964, long before any area NW of telegraph and I-696 was developed. It was settled long before them.

Rochester Hills was incorporated in 1984, and sprawl was already well on its way towards M-59 and I-275 by that point. However, it hadn't reached as far as Fenton, as you try to claim.

[Scottathew]

Assuming this editorial is true, can you give me local examples where outer sprawlburbs are dying or dead? Because I can't think of any.

Here's an example:

http://maps.google.com/?ll=42.727659...h&z=16&vpsrc=6


It's 26 Mile and I-94.

This is near where one of my buddies lives. Although a couple of the houses have built since the sat photo was taken, most of the planned sprawlburb remains an unbuilt dream in a bankrupt land developers mind.

Pretty much all new construction has flat out stopped. People aren't moving further out anymore.


Here's another example of a planned sub dying in my neighborhood, believe it or not, 13 Mile and Mound in Warren: http://maps.google.com/maps?q=Warren...higan&t=h&z=16


Here's the story on that one: The land bounded by 13 Mile, 12 Mile, Mound, and an imaginary line 1/2 mile east of Mound used to be owned by GM. As early as the beginning of this century DEER and other wild animals lived smack-dab in the middle of Michigan's 3rd largest city.

GM had been holding onto the land for possible future expansion of the Tech Center. When it became clear to GM that they'd be shrinking instead of growing, they tried to give the land to Warren, but was thwarted by a kook councilman and now mayor, Jim Fouts.

Finally GM strikes a deal to sell the land to a developer instead of giving it to the city. Warren zones it all up. A shopping center pops up with a Meijer, Buffalo Wild Wings, Chilis, LA Fitness, two gas stations, as well as many other establishments.

Around 2006-2007ish they start paving and building the roads for the new apartments, condos, and homes in what is to be known as "Heritage Village". However, the satellite photo is accurate. Literally, only about 20% of that sub was ever built. Those that bought houses there live in a ghost town of freshly paves streets that lack houses.

This housing crisis is so real that even an inner ring suburb like Warren is paralyzed by it.



Simply, there are WAY too many houses, and not enough people to fill them. When you have an ass backwards federal government that under George W. Bush was giving a $7,000 tax credit to people building new structures, this is what happens. So, if you have a housing crisis, where the supply is very high, and the demand is very low, and it causes prices to crash, why the hell would you give a government incentive to BUILD more?

The "housing crisis" has caused home ownership to be much more affordable and within the reach of many more people. The people that lived beyond their means have been reality-checked into a rental situation.

[Novine]

"Seems to be that the inner suburbs are [[very generally speaking) declining, and the outer suburbs are comparatively much stronger. And I live and work in an inner suburb."

I wouldn't confuse the state of suburbia today with where it was a few years ago. There's plenty of commercial vacancies here in Novi. Novi Town Center never filled some of its vacant spaces and only the arrival of Wal-Mart has given some the hope that the remaining vacancies will fill when Wal-Mart opens. FountainWalk was never completed and the demolition of portions of the complex has left a large open space between the two sections that are occupied. You can find unfinished subdivisions throughout Novi and the surrounding areas like Northville and Lyon Townships. In comparison to some inner suburbs, you can make the case that Novi is doing better than those places. But that can't hide the fact that foreclosures and vacancies and abandoned developments litter the landscape in places like Novi and Canton and similar suburbs that have developed over the past 30 years.

People point to some suburbs in SE Michigan as doing well when in reality, they only look good in comparison to their sickly neighbors. When compared to suburban communities in other parts of the country, they are falling behind. You start digging into the numbers for places like Southfield, Farmington Hills and West Bloomfield and you see plenty of indicators of communities in decline, which shouldn't be a surprise. What do any of those communities have to hold onto residents seeking the next shiny bauble of a suburb? Tack on another 10 - 20 minutes of a commute and you can live in Novi or Oakland or Macomb Township.

As has been discussed many times, SE Michigan hasn't added population in at least 30 years. We've simply been shifting the population out of Detroit and into the suburbs without adding any new people. With the exodus of people following the downturn in the economy, many of the suburbs are now experiencing the same outflow of people. Check out the 2010 Census numbers for communities in SE Michigan. Even former boom suburbs like Wixom and Brighton and Plymouth Townships saw their population growth flatten out or in some cases decline. Growth is still occurring in some suburban communities but it's hard to see how any of it is sustainable when the region as a whole is in decline.

[Scottathew]

Huh? Who is 'most'?

Oh, I get it... you're a troll.

Just about everyone. Fenton is too far away to be considered in this context. It's not a suburb or sprawlburb of Detroit. Hell, I don't even think it's a suburb of Flint!

[detroittrader]

Just about everyone. Fenton is too far away to be considered in this context. It's not a suburb or sprawlburb of Detroit. Hell, I don't even think it's a suburb of Flint!

My late Uncle owned [[now run by his children), a party store at Hickory Ridge and Rose Center Rd in far Northwest Oakland County's Rose Township. 40 years ago it was an outpost used by folks wanting beer, gas, fishing licenes, bait, etc. It's still has rhe feel of an outpost, though there was some housing development there in the early 90's. My relative's have a Holly mailing address, went to Fenton School's but have never considered themselves part of the Detroit area. They travel to Flint often for whatever reason, never venture much further south than Pontiac.

[Mikeg]

......... When you have an ass backwards federal government that under George W. Bush was giving a $7,000 tax credit to people building new structures, this is what happens. So, if you have a housing crisis, where the supply is very high, and the demand is very low, and it causes prices to crash, why the hell would you give a government incentive to BUILD more?

The "housing crisis" has caused home ownership to be much more affordable and within the reach of many more people. The people that lived beyond their means have been reality-checked into a rental situation.

I think you have your facts "ass backwards". First off, none of the tax credits for home purchases in 2008, 2009 and 2010 were given to builders of new structures, they were given to qualified buyers who purchased their first home, regardless of when it was built. Additionally, the 2008 legislation stipulated that the credit be repaid in 15 equal annual installments beginning in 2010, so it was basically a no-interest loan for first-time home buyers. Under Obama's stimulus program legislation, this incentive became a true tax credit in 2009 and it was later expanded to non-first-time home buyers. [source]

Secondly, the bubble began to burst in 2007 [source] [[Richard Sable was the condo builder in your example of Heritage Village and his company went under in the second half of 2007), which make it clear that the federal tax credits for first-time buyers were in response to the "bust", not fueling it.

Third, it was the availability of historically low mortgage interest rates coupled with greatly-relaxed underwriting standards in the 2000-2006 time frame that "caused home ownership to be much more affordable and within the reach of many more people" - not the housing crisis as you claim. Even with continued low interest rates on home mortgages, mortgage lender's tightened down payment and credit score requirements have put home ownership beyond the reach of many who could have gotten a mortgage back in 2000-2006.