Why are urban neighborhoods are the future of housing

A pair of interesting articles on Salon and Atlantic Cities examine the long-term demographic shifts that are increasingly favoring smaller, walkable, and urban neighborhoods like ours over the dominant housing style of the the previous half century - the suburban development. The authors point to a great convergence of two large demographic groups - the Baby Boomers (1946-1964) and the Millennials (1981-2000) both of which are increasingly interested in communities that are easily accessible and pedestrian friendly.

While the Baby Boomers are downsizing and seeking smaller houses with less upkeep and closer to community centers, hospitals, restaurants, and parks, the Milleanials are outright rejecting their parents' suburban lifestyles in favor of higher density neighborhoods. This is evidenced by surveys showing that Americans are driving fewer miles and that fewer young drivers are getting drivers' licenses. Even more striking is the fact that  46% of drivers aged 18-24 said they would choose internet access over owning a car.

While it may be premature to celebrate the end of American's love affair with the car -- and surely some of the conclusions are due to the terrible economy and its disproportionate impact on young people -- the long-term trends are unmistakable: the demand for urban, walkable neighborhoods is going to far outstrip the supply for many years to come.

The graph below demonstrates this better than I can the representation of demand for transit-oriented development via-a-vis the supply. 

This data is further confirmed by the 2011 Community Preference Survey by the National Association of Realtor's, which indicated that 58% of all responds indicated a preference for "a neighborhood with a mix of houses and stores and other businesses within an easy walk."

All of this suggests a continued, strong interest in urban real estate but it also raises a question: will the pent-up demand translate into higher real-estate prices or more rentors. After all, the other great story about this recession has been the rise of rental housing nationwide, including the Triangle, which hit the highest occupancy rate of rental properties in a decade.

Although I am personally ambivalent on rent vs. own debate, the folks at Trulia Trends have devised a really neat tool which shows in which metro area it is cheaper to buy a home rather than rent. Not surprisingly, in our region it is still more affordable to buy than it is to rent.