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Where you live is personal

Richard Brinegar 144 April 27, 2017

Where you live is personal, Sarah KirschBy: Sarah Kirsch, Executive Director, ULI Atlanta  CREWMember

Where you live is personal, particularly if you are in real estate. You may see where you live as linked to your identity, perhaps even a reflection of your values. As housing consumers, we all make housing trade-offs within a given price range – proximity to work, size of home, quality schools, character of neighborhood, area amenities, etc. With three boys who are growing by the minute, I joke that all I want in life is a basement. But, in reality, I will probably continue to trade-off not having a basement in exchange for a great neighborhood, convenient location, and terrific school district. Plus, who needs a basement when they can play outside, including at many neighborhood parks or in the street? [I am kidding about the street part, kind of…]

In Atlanta, there is perhaps no greater location identity than OTP v. ITP (as proxy for urban versus suburban). As a lifelong ITP’er, good friends chide me that I will not melt if I drive OTP. Similarly, I watch my sister bristle every time someone makes the ‘halfway to Chattanooga’ joke when we go to her house that is a whopping 20 minutes away.  It is personal.

It is not surprising, then, that a recent report by the Urban Land Institute and RCLCO received some very personal reactions. Housing in the Evolving American Suburb takes a fresh look at how we define ‘urban’ and ‘suburban’ based on a variety of housing and locational characteristics. ‘Urban’ housing markets can be found in the center city, as well as in walkable suburbs, such downtown Marietta.  ‘Suburban’ housing markets can be found in Peachtree City, as well as in northwest Atlanta. It is analytical, not personal.

In reviewing the report, you gain a sense that the suburbs are ripe with opportunity and not just for conventional suburban housing. They are growing faster, are more diverse, and are both younger and older than we may think. There is demand for a wider variety of housing types than is currently offered, and there is growing demand for what we often think of as more urban amenities, particularly walkable communities.

The report notes that, “From 2000 to 2015, suburban areas accounted for 91 percent of population growth and 84 percent of household growth in the top 50 metro areas.” So, despite all of the cranes we see dotting the intown skyline, taking advantage of the unprecedented demand for intown living, there is significant untapped real estate opportunity in our suburban markets. Further, we know that suburbs, and suburban housing specifically, consumes more land than any other land use, so we owe it to our region to be thoughtful about it.

I believe the greatest value in the report is not in defining urban versus suburban, but recognizing that the suburbs are not monolithic. There are very different types of suburban markets and we need to take a more nuanced approach to (1) assess suburban housing development opportunities and (2) structure public investment and public policies. The report defines and maps five suburban prototypes:

  1. Established High-End Suburbs have high home values and established development patterns that offer strong opportunities for market-based development, but also tend to have some community objection to new growth. When new homes or communities are built, they are often at higher densities or price points than nearby neighborhoods.
  2. Stable Middle-Income Suburbs include a wide range of home values attainable to a range of households. Some evidence indicates that these areas are becoming increasingly scarce, as they are gentrifying into higher-end communities or deteriorating into economically challenged areas.
  3. Economically Challenged Suburbs have lower home values and have seen little population growth in recent years. They may have aging infrastructure or underperforming city services that make them less attractive for new market-rate development.
  4. Greenfield Lifestyle Suburbs are at or close to the suburban fringe, typically adjacent to established high-end suburbs, and are where the bulk of new community development is occurring. These areas have mostly developed over the past ten to 15 years, and likely have some land still available for new development.
  5. Greenfield Value Suburbs are close to the suburban fringe, often adjacent to stable or economically challenged areas, or near lower-wage job concentrations. These suburbs attract new value-oriented communities that offer attractive home prices for many households, and sometimes reflect a “drive until you qualify” pattern.

ULI Atlanta used this analysis to take a look at the Atlanta housing market, which was the subject of our first quarter 2017 program. Some observations from that discussion include:

  • We will continue to see more pockets of urbanity in Atlanta’s suburbs in response to demographic and consumer shifts.
  • Millennials will continue to buy in the suburbs. There are a lot of unanswered questions about how to meet their market preferences and affordability, and there are tremendous opportunity for those who can offer creative solutions.
  • Most people want to stay in their current neighborhood – same grocery story, same church – when they retire. As the Baby Boomers look to retirement, Atlanta is going to need a lot more suburban housing and amenities serving those who are downsizing.
  • Atlanta suburbs are in better shape to survive the downsizing of the Baby Boomers, because we have a lot more members of the next generation (Gen X) than most markets; those who will buy the Baby Boomers’ homes.
  • We probably underestimate the public policy needs (zoning, infrastructure and public engagement) in order to keep up with evolving suburbs. The market opportunity, particularly at the high end, is strong, but how to create the framework for a sustainable suburban environment is less obvious. That may mean more walkable infrastructure and infilling of parks. That may mean form-based codes. That may mean transit.
  • We probably also underestimate the market opportunities in economically distresses suburbs, areas where historically we have spent more time thinking about policy and infrastructure needs.
  • Maintaining and developing affordable housing requires regional solutions and those will vary by type of suburban market.

We believe this report is the first step in a broader conversation about our evolving suburbs, helping frame opportunities for real estate practitioners as well as policy makers.  More to come.

Sarah Kirsch in the Executive Director of ULI Atlanta, one of the largest and most active district councils of the Urban Land Institute. ULI is an independent global nonprofit supported by members representing the entire spectrum of real estate development and land use disciplines. The mission of ULI is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Sarah began working with ULI in 2012 as Director of the Center for Leadership and assumed the Executive Director position in 2014. Prior to joining ULI, Sarah spent twelve years with RCLCO (Robert Charles Lesser & Co.), the nation’s leading independent real estate advisory firm.  Ms. Kirsch earned her Bachelor of Arts in Public Policy from Duke University’s Terry Sanford School of Public Policy.

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