Search for housing affordability drives growth in the suburbs

Dive Brief:

Despite forecasts that the suburbs would become ghost towns as homebuyers flocked to urban areas, suburban development continues to expand more quickly than ever, The New York Times reported.
Affordability continues to be a top driver in buyers’ choice to live in outlying areas.
However, dense cities are getting denser while cities already spread out are continuing to do so. Seattle, Chicago and Minneapolis experienced the greatest density increases of U.S. cities from 2010 to 2016. Meanwhile, the Sun Belt states — in particular, San Antonio, Austin, TX, and Oklahoma City — led among cities that are becoming less dense.

Dive Insight:

For many years, the industry expected millennials to gravitate toward cities, but that hasn't necessarily been the case, as nearly 50% live in the suburbs and 20% live in rural areas, according to Zillow. Amid skyrocketing home prices, the suburbs typically offer more affordable housing opportunities.

And while most homebuyers — whether millennial, baby boomer or otherwise — crave walkability and close proximity to shopping and employment, recent data show that price and a desire to own a home will continue to trump those wishes.

Developers in master planned communities are recognizing this, increasingly incorporating networks of walking and biking trails that lead to retail centers and town squares, among other lifestyle-based amenities.

The suburbs also are seeing greater numbers of renters. In all but one of the top 20 U.S. metros, the number of renters in the suburbs is growing faster than renter numbers in the city, according to a recent RentCafé report. For those seeking rate relief, it may be short-lived, however, as monthly rents grew 2.5% year-over-year in the suburbs, outpacing urban rental rates for the first time in four years.

The suburban growth in The Times’ report is highest in places with room to move, whereas many of the cities with increasing density face boundary issues. For example, Seattle is bordered by water on two sides, Chicago abuts a lake, and Boston edges the Atlantic. In many cases, there’s nowhere to go but up.