A Time of Transformation in Housing and Transportation

January 30, 2012
Reflecting Back, Looking Ahead

by James Brooks 

People who earn large cash profits from developing residential and commercial real estate suggest that retiring baby-boomers and young couples with or without children want to live in walkable, mixed-use neighborhoods. "We in real estate are fundamentally re-tooling how we design, plan, regulate and finance to serve this pent-up demand," says land use developer and strategist Chris Leinberger. 

The evidence points to a willingness for many to give up thousands of square feet of living space and open land in exchange for more compact residences close to shopping, dining and entertainment. The trend also suggests that people will pay higher prices for housing in denser communities in exchange for reductions in time, distance and costs associated with traveling by car to reach an employment destination. 

The trend line is moving in the direction of urban community models. If borne out over the next decade or two, this shift will represent the most dramatic change in land use, housing and transportation patterns since the completion of Levittown in 1951. 

The impact of this trend on local governments will be as unique as each community's geography, demographics and capacity to manage change. But one thing is clear: some cities will benefit from this new development trend and other cities will suffer as a result. The difference will come in how city and town leaders choose to view and respond to the components inherent in this change in living, working and traveling patterns. 

While there are many factors that drive land use and housing trends, the most important ones now and in the future include the need for a broad array of housing and transportation choices to fit the diverse needs and circumstances of a growing and changing population. 

Housing 

A principal factor driving the supply and demand expectations about housing is simple demographics. Eighty million Americans make up the baby-boom generation (born 1946-1964), and, as of January 1, 2011, 10,000 baby-boomers are reaching age 65 each day. This will continue until December 30, 2030. These retirees are living longer, healthier and more active lives than their predecessors. For them, retirement is about continuing an "active lifestyle," which by definition requires easy access to shopping, dining, entertainment and portals to global destinations. 

This translates into decisions by many to swap the 3,500-square-foot detached single-family house in a first- or second-tier suburb for a smaller townhouse or condominium nearer to the urban core. 

At the other end of the age spectrum are the singles and couples in their 20s. Many are college graduates or have earned Master's degrees. At present, this group makes up a large portion of the unemployed or underemployed, which is particularly unsettling given that many also are carrying considerable student loan debt and have little if any savings. As a result, Generation Y has been slow to form new households. However, as employment of this group increases, as it undoubtedly will despite the ravages of the Great Recession, these young people will gravitate to the employment centers that offer the complete package of work, live and play. They will want access to public transit and bike lanes and prefer walkable lively streets with a suitable mix of retail and social venues all interconnected with Wi-Fi. What they will need in the immediate future is solid, safe, affordable rental housing. 

Other large segments of the population also will need rental housing. One analysis by researcher Joel Kotkin anticipates that the U.S. will attract 100 million new immigrants by 2050. Also, several million former homeowners impacted by foreclosure will be in the rental housing market for several years as they rebuild their damaged credit ratings. 

Transportation 

If the decisions about where and how people live are changing, then the critical related issue is how people will move among the places they wish to frequent - jobs, homes, retail centers, entertainment and cultural venues. 

For decades state and national transportation policy has focused on development of a highway network that supports automobile transportation, often to the detriment of the other modes that comprise the total surface transportation system. However, the costs of solo driving, Americans' true national pastime, are accelerating. High gas prices (the average price nationwide for a gallon of self-serve regular gasoline on January 20 was $3.38, according to AAA) are a contributing factor that is altering the urban housing markets by reducing demand for development outside of metro areas and increasing demand in areas closer to the urban core. 

In this set of conditions, the principles of "smart growth" continue to gather greater attention. Accelerated by economic pressures the new pattern of land use characterized by fewer and shorter automobile trips, lower energy consumption and reduced greenhouse gas emissions has spurred planning that accommodates mixed-use development and transportation investment that provides more travel options. 

Resources for Local Leaders 

In surveying this landscape, NLC's programming is aligned to provide resources for city officials that help them exercise the necessary leadership to position their communities effectively in the face of these housing and mobility trends. 

In the area of housing and neighborhoods, strong emphasis in the near-term is being placed on housing preservation and rehabilitation as key aspects of neighborhood stability. Subsidiary issues include maintaining and reusing vacant property, invigorating community life at the sidewalk level and expanding housing and mobility options. 

For the long term (2013-14), projects will evolve beyond stabilization to supporting responsible housing and neighborhood reinvestment and revitalization. Activities will stress: 

• Deliberate citizen inclusion to help shape problem assessments and sustainable outcomes; 

• Mixed housing options (ownership, shared-equity, rental); 

• Mobility strategies that reduce automobile dependence; and 

• Employment and entrepreneurship opportunities that retain money in the community. 

With regard to land use and regional transportation systems, a watershed moment occurred when federal cabinet departments and agencies (U.S. Departments of Housing and Urban Development and Transportation and the Environmental Protection Agency) embraced the livability, sustainability and multidisciplinary regional planning approaches incorporated under the rubric of smart growth. 

This shift means that cities need to focus on issues that impact the many ways that regions approach integration of land use and transportation. These include mixed-use zoning and form-based building codes, infill development, growth management and transit-oriented development. 

Programming will support a bottom-up approach to transportation planning that respects diversity at the local level, provides assistance to local governments by way of guidelines and tools for land use and supports the process necessary to build consensus. 

NLC's work plans will include research and analysis, innovation sharing through printed and online media, peer-to-peer learning and network building. Where appropriate, direct technical assistance efforts will be undertaken in target communities - ones with limited capacity, that can benefit from the example and expertise of high-achieving cities.

Details: To learn more about NLC's efforts to help cities and city leaders respond to evolving trends in housing and transportation, contact the program director for community development and infrastructure at brooks@nlc.org.