The Suburbanization Of America: A Look Into Housing and Population Trends
As our nation continues to grow, develop and change over time, so does the housing landscape. In 2016 and 2017, population growth in metropolitan cities has slowed for the 5th straight year according to new census data. Americans are trading in their high-density domiciles inside urban centers for land and low-density living out in sprawling suburbia. Despite what you hear about “urban revivals” and “gentrification,” the suburbanization of America presents a huge opportunity for construction professionals if they position their business correctly.
More Suburban Builds
Typically, living in our dense metropolitan cities is cramped – the US Census Bureau considers any area with between 1,500 to 2,213 households per square mile urban. Suburban density ranks in between 102 and 1,500 households per square mile, and less 102 households is rural. Interestingly, the last 10 years of population dynamics shows that while suburban housing markets have grown, both rural and urban markets are in steady decline, despite what new trend you read about urbanization. When it comes down to it, most Americans looking to put down some roots actually want less neighbors and more land.
However, a lot of areas exploding with suburban growth don’t have the housing or lifestyle infrastructure to support to droves of people moving away from city centers. Suburban parts of California, Oregon, and Washington are becoming increasingly popular amongst first time homebuyers and seasoned homeowners alike. This growth means the construction industry is poised to make some serious money working on tract home development, semi-custom tracts, and custom estate new construction alongside shopping centers, hospitals, schools, etc.
Boom – Bust – Recovery
In the last 20 years, the American housing market has been very volatile. As lending practices relaxed and property values started to skyrocket, the housing and real estate market followed trends of boom, bust, and recovery. The early 2000s saw a boom in suburban markets where single family homes were actually overbuilt in the interest of profit. By the time the credit crisis struck, many homeowners were unable to afford suburban living – the housing market was a bust. People started moving back into cities and urban areas.
Part of being a successful construction professional is timing these periods of boom and bust within your own business. When you notice urban housing prices on the rise and job trends characterizing an area, you have a first row seat to the trend of suburbanization in the American housing market. For example, when you see large wage gains and gentrification projects in metropolitan areas, you’re seeing the top end of the boom – the cost of living is on the rise and laborers are being paid more for less. Prepare your operation for the following bust, focusing on foreclosures, bank-owned properties, and renovations of existing domiciles.
Trends on the Horizon
While new construction struggles to keep pace with higher wages, relaxed credit standards, and increased demand, younger Americans are increasingly attracted to medium-sized cities and their suburbs. There’s income-earning propositions, stable infrastructure, and lower asking prices compared to the big-name metropolitan cities. It’s just not feasible to live in an area with high wage growth for a lot of average Americans anymore – there’s a mismatch between their incomes, available credit, and going market rates.
Without the subprime loans of the early 2000s, first time homebuyers and buyers in lower income brackets will struggle to find urban properties they can afford. This drives potential buyers to the suburbs, where they will find more for their dollar, despite being further away from urban infrastructure and employment opportunities. Be on the lookout for competitive markets, new construction tracts, and up and coming neighborhoods in 2017 – the housing market will continue to be more volatile, more competitive, and expensive in the next year.
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