Shiller: The Suburbs are not coming back!

User Forum Topic
Submitted by paramount on March 27, 2012 - 6:05pm

Well, maybe...but this doesn't sound good for Temecula type exurbs.

As economists and housing insiders continue to analyze every grain of housing data, most would agree that housing will continue to drag down the overall economic recovery in the near future. Many young people are choosing to live at home for a longer period of time instead of buying. Moreover, would-be homebuyers are settling into modern apartments and condominiums, further hindering a housing rally. Shiller says the shift toward renting and city living could mean "that we will never in our lifetime see a rebound in these prices in the suburbs."
A perpetually sluggish housing market, which Shiller believes has become "more and more political," might push the country in a "Japan-like slump that will go on for years and years."

http://finance.yahoo.com/blogs/daily-tic...

Submitted by flyer on March 27, 2012 - 9:50pm.

I'm no expert on this, and I'm sure the realtors here will offer far more in-depth thoughts on this speculation, but it is for the reasons you have cited that we have suggested to the young people in our family who have good jobs, and are buying real estate, that they do so near centers of employment, with excellent schools, shopping, restaurants, etc., etc.

A couple of our kids who have purchased homes in the Carmel Valley and Del Sur areas which have all of the above going for them, have mentioned that families seem to be moving in at a very brisk pace lately. It seems they all love the fact that everything they want and need is literally right out their front door.

On that basis, I guess one could speculate that over the next few years there will be "pockets" of real estate that will be in high demand, and other areas that will literally languish forever. JMHO.

Submitted by Jazzman on March 28, 2012 - 6:54am.

You'd expect gas prices may be influencing buyers as well,

Submitted by svelte on March 28, 2012 - 7:08am.

A few things to consider here.

1. The more times gas prices spike (like they have the last few years), the less likely people are to buy someplace where their commute is long. I know we factored that in to our decision.

2. More and more cities, even in the suburbs, are building with a town center concept. This too will minimize driving and will make the 'burbs that have this feature more appealing.

3. Each year it gets easier and more acceptable to telecommute. More and more people will be doing their work in their pjs while petting the dog...which can be done just as easily from a suburban ranch house as from a downtown loft.

4. Some of us just need space around us. I don't see that changing.

Submitted by ocrenter on March 28, 2012 - 8:04am.

I'm still not convinced.

As long as there's land and as long as we do not see Asian style population density, i just don't see the end of suburbs.

Personally I do think overall it is better for the earth to be in a crowded city environment. Better for ones health too as there will be more reliance on walking. But I doubt that's going to happen any time soon.

Especially with the way SD is structured and the way people are telecommuting. The survey on commute was very telling, Almost 75% had commutes less than 20 minutes. And I don't think piggs are all concentrated in the core of the city. Rather a huge reason is the telecommuting and the proximity of high tech jobs in the suburbs.

http://piggington.com/how_long_is_your_c...

Submitted by The-Shoveler on March 28, 2012 - 8:24am.

SoCal is one big Burb for the most part.
I think it is every environmentalist dream that the remaining people in the world, move to high density cities, and impose some constraint on population growth as well.

But I don’t see that happening at least not in SoCal. Also cities once they become very dense are their own worst enemy as if you really do need to grow a business it is very hard to scale in crowed expensive cities. Telecommuting is not just for work anymore as well, more and more schooling is being be done via telecommute as well.

Gas will be less an issue with 100MPG and Nat-Gas cars (which are coming), someday there may even be some convent mass transit who knows. Look around, every time the city or utility needs to replace a Truck or car, it usually is with a Nat Gas vehicle these days.

As the economy improves the burbs will get back to cost to build+5-20% or so fairly quickly.
With inflation eventually the price will get back to peak nominal price, but that will probably be a while yet.

Submitted by FormerSanDiegan on March 28, 2012 - 8:35am.

The-Shoveler wrote:
SoCal is one big Burb for the most part.

This is a myth. Consider Los Angeles-Long Beach-ANaheim urban area. To many folks, this is the definition of suburban sprawl.

But, guess what ? That urban area has the highest population density in the country.

http://la.curbed.com/archives/2012/03/lo...

Submitted by Jazzman on March 28, 2012 - 8:39am.

Are you comparing apples with apples. Urban areas with metropolitan centers? I doubt it.

Submitted by FormerSanDiegan on March 28, 2012 - 8:40am.

As for SHiller ...

I tend to agree (mostly) with him. I think demographic trends favor the urban areas o=ver suburban. But I wouldn't say the suburbs are NEVER coming back. For two reasons:

1. There might be economic factors that make living in the suburbs opr exurbs more favorable in the future (e.g. high prices in the urban core. We saw this with many people moving to Riverside County in the early 2000's. Technologies such as efficient vehicles or acceptance of virtual workplaces could also impact costs to live away from urban centers.

2. Generational tastes change - Each generation tends to buck things that the previous generation favors. Right now it is desirable to live in urban areas. In 20 years, kids that grew up in densely populated areas might want to spread out more and live differently than they grew up. Tastes and trends can change a lot over 20 years.

Submitted by FormerSanDiegan on March 28, 2012 - 8:49am.

Jazzman wrote:
Are you comparing apples with apples. Urban areas with metropolitan centers? I doubt it.

Yes I probably did not compare apples to apples.

I guess the statistics can be skewed by defining the areas differently.

But still, I thought it was interesting that what I thought was the most sprawling place in the country is actually the most dense, by some metrics. WHo knew ?

Submitted by bearishgurl on March 28, 2012 - 11:14am.

I saw these two articles recently in my "First Tuesday" subscription which both suggest that far-flung suburbs and exurbs will be the "last choice" of the biggest immediate-future homebuyer-group (Gen Y).

http://firsttuesdayjournal.com/suburban-...

http://firsttuesdayjournal.com/poverty-h...

The first article touches on and the second one discusses in depth the premise that these suburbs/exurbs are sought after by the poor due to lower prices to rent/buy in. In this case, affordability trumps desirability....

Submitted by AN on March 28, 2012 - 11:38am.

bearishgurl wrote:
I saw these two articles recently in my "First Tuesday" subscription which both suggest that far-flung suburbs and exurbs will be the "last choice" of the biggest immediate-future homebuyer-group (Gen Y).

http://firsttuesdayjournal.com/suburban-...

http://firsttuesdayjournal.com/poverty-h...

The first article touches on and the second one discusses in depth the premise that these suburbs/exurbs are sought after by the poor due to lower prices to rent/buy in. In this case, affordability trumps desirability....


I wonder how many of these people even know and hang out with Gen Y. I know MANY Gen Y, and all of them say that once they have kids, they're moving to the burbs. even ones who are current living in downtown and Hillcrest. I ask them why, and they said school and safety. They don't want their kids to be able walk by a bar on their way to school. It would be cool to walk by a bar on your way to work, but not cool when you kids walk by one on the way to school. These are very educated Gen Y'er who put school quality a very high priority.

Submitted by ctr70 on March 28, 2012 - 11:58am.

This is a very good question, especially if you are looking at buying rental houses in far flung Riverside County where houses are super cheap right now. Will people still rent in Hemet, Victorville, Temecula, Menifee, Desert Hot Springs with $6 a gallon gas? Will high gas prices depress rents?

That is a good point about poor people moving out of inner cities to suburbs in CA too. I know that a lot of lower income folks have moved out of LA to places like Moreno Valley, Victorville, Perris, etc... probably b/c of the lower rents and less crime (less crime for now at least). The whole idea that ghetto areas are more likely in inner cities has changed with the low income migrations out to Riverside and San Benardino Counties (and Lancaster/Palmdale part of LA County too).

Submitted by bearishgurl on March 28, 2012 - 12:01pm.

AN, if you go to the bottom of the second article, its information is derived from this piece:

http://money.cnn.com/2011/09/23/news/eco...

Click on the link above and look at CA. You will notice it is referring to exurbs and *new* "suburbs" which sprung from longtime farmland.

It's not referring to communities such as Mira Mesa, which is actually "urban" (or "1st-tier suburban"). YOU and your "Gen-Y friends" are close to major job centers. The (CA) communities the CNN article is referring to sprung up in the last decade out of well-known agricultural areas.

These are CA's future ghost towns, IMHO.

A property costing $400K in MM would cost only $150K - $200K in the outskirts of Stockton (for a comparable property). This is where the "poor" from both in-state and out-of-state are flocking to. They can't fit a family of five into a 1 br condo in MM for $1200 month.

Submitted by bearishgurl on March 28, 2012 - 12:07pm.

ctr70 wrote:
This is a very good question, especially if you are looking at buying rental houses in far flung Riverside County where houses are super cheap right now. Will people still rent in Hemet, Victorville, Temecula, Menifee, Desert Hot Springs with $6 a gallon gas? Will high gas prices depress rents?

That is a good point about poor people moving out of inner cities to suburbs in CA too. I know that a lot of lower income folks have moved out of LA to places like Moreno Valley, Victorville, Perris, etc... probably b/c of the lower rents and less crime (less crime for now at least). The whole idea that ghetto areas are more likely in inner cities has changed with the low income migrations out to Riverside and San Benardino Counties (and Lancaster/Palmdale part of LA County too).

I would agree that a well-built 1940's 3-4 bedroom house in LA County's Lakewood or Downey on a street with a grassy tree-lined median is highly preferable to a house of the same size in Moreno Valley .... for a WHOLE HOST of reasons, not the least of which is "neighborhood stability."

And it's worth 3+ times as much, as well. We must ask ourselves why this is so.

Submitted by sdduuuude on March 28, 2012 - 12:13pm.

Why is it not possible for the amenities associated with a city center to move out to the suburbs ?

I consider Carmel Valley a suburb, but someone below said it has everything you need right there.

Suburbs may change, but I'm not so sure they are going away forever.

Maybe distant bedroom-only communities.

Submitted by The-Shoveler on March 28, 2012 - 12:16pm.

While I can see the exurbs taking longer to recover, over the long term in SoCal we are forecast to keep growing population at a fair clip. I think the exurbs will look a lot less exurbesh in 20 years.

SoCal is not quite Detroit either. The two are different, I think Shiller was painting with a wide brush.

Submitted by bearishgurl on March 28, 2012 - 12:17pm.

sdduuuude wrote:
. . . Maybe distant bedroom-only communities.

Yes.

Submitted by sdrealtor on March 28, 2012 - 12:19pm.

I just love when these so called experts try to put everything into a nice neat little box as if the world actually works that way.

Submitted by bearishgurl on March 28, 2012 - 12:29pm.

The-Shoveler wrote:
While I can see the exurbs taking longer to recover, over the long term in SoCal we are forecast to keep growing population at a fair clip. I think the exurbs will look a lot less exurbesh in 20 years.

SoCal is not quite Detroit either. The two are different, I think Shiller was painting with a wide brush.

Re: the bolded stmt, this will only happen if a plethora of well-paying jobs move to the four CA "exurban-poor" areas as shown on the CNN/Money map.

http://money.cnn.com/2011/09/23/news/eco...

Blue or white collar ... doesn't matter ... the jobs need to pay a living wage and have benefits. For the most part, the families moving to these communities by necessity don't have a gasoline budget of $400+ month for one vehicle.

I don't think "retirees" are necessarily attracted to these exurban areas, unless they are originally from there (and I DO know some that are). Most "retirees" or "near-retirees" in CA that would consider moving for retirement already own a longtime home in a more desirable area of CA so would have no incentive to relocate in a "Cali-armpit" in the absence of family there.

Submitted by bearishgurl on March 28, 2012 - 12:31pm.

sdrealtor wrote:
I just love when these so called experts try to put everything into a nice neat little box as if the world actually works that way.

Do any "realtors" around here have anything of value to add to this thread??

Submitted by briansd1 on March 28, 2012 - 12:53pm.

ocrenter wrote:
I'm still not convinced.

As long as there's land and as long as we do not see Asian style population density, i just don't see the end of suburbs.

Personally I do think overall it is better for the earth to be in a crowded city environment. Better for ones health too as there will be more reliance on walking. But I doubt that's going to happen any time soon.

Especially with the way SD is structured and the way people are telecommuting.

I agree ocrenter.
I would add that the car culture is still very much part of American life.

San Diego is different, built on a north south axis with downtown, not at the center of the region, but off to the side.

Generally speaking, I think that demographics shifts will actually help "glamour" cities such as San Diego. But suburbs of non glamour cities will be hurt. Educated people want to live in or near cities with excitement and culture.

Suburbs of Cities such as Macon, GA or Wichita, KS, Fort Wayne, IN, will be hurt. But Plano, TX, Irvine, Lake Forest, Temecula will be fine because they are close to large metropolitan areas.

Submitted by UCGal on March 28, 2012 - 1:37pm.

bearishgurl wrote:
The-Shoveler wrote:
While I can see the exurbs taking longer to recover, over the long term in SoCal we are forecast to keep growing population at a fair clip. I think the exurbs will look a lot less exurbesh in 20 years.

SoCal is not quite Detroit either. The two are different, I think Shiller was painting with a wide brush.

Re: the bolded stmt, this will only happen if a plethora of well-paying jobs move to the four CA "exurban-poor" areas as shown on the CNN/Money map.

http://money.cnn.com/2011/09/23/news/eco...

Blue or white collar ... doesn't matter ... the jobs need to pay a living wage and have benefits. For the most part, the families moving to these communities by necessity don't have a gasoline budget of $400+ month for one vehicle.

I don't think "retirees" are necessarily attracted to these exurban areas, unless they are originally from there (and I DO know some that are). Most "retirees" or "near-retirees" in CA that would consider moving for retirement already own a longtime home in a more desirable area of CA so would have no incentive to relocate in a "Cali-armpit" in the absence of family there.

I remember when Poway was considered a distant burb. Heck - when I first moved to UC (as a kid in the early 60's) it was a distant burb.

I also know retirees who raised their kids in San Diego, kids still live in San Diego, but sold and bought in Murrieta. Wanted a newer home, lower maintenance, quiter, less urban lifestyle.

Lots of exceptions to every rule.

Submitted by AN on March 28, 2012 - 1:38pm.

bearishgurl wrote:
AN, if you go to the bottom of the second article, its information is derived from this piece:

http://money.cnn.com/2011/09/23/news/eco...

Click on the link above and look at CA. You will notice it is referring to exurbs and *new* "suburbs" which sprung from longtime farmland.

It's not referring to communities such as Mira Mesa, which is actually "urban" (or "1st-tier suburban"). YOU and your "Gen-Y friends" are close to major job centers. The (CA) communities the CNN article is referring to sprung up in the last decade out of well-known agricultural areas.

These are CA's future ghost towns, IMHO.

A property costing $400K in MM would cost only $150K - $200K in the outskirts of Stockton (for a comparable property). This is where the "poor" from both in-state and out-of-state are flocking to. They can't fit a family of five into a 1 br condo in MM for $1200 month.


According to Wikipedia, Fresno, Modesto, Bakersfield and Stockton are not suburb. They're all small cities. Areas like Mira Mesa, Clairemont Mesa, Carmel Valley, etc. are suburbs. So, your definition of urban is not what average people would considered as urban.

FYI, Fresno, Bakersfield, etc. did not "sprung up" in the last decade. They've been there for many many years. I can bet you Fresno is not going to be a ghost town.

Submitted by sdrealtor on March 28, 2012 - 1:59pm.

briansd1 wrote:
ocrenter wrote:
I'm still not convinced.

As long as there's land and as long as we do not see Asian style population density, i just don't see the end of suburbs.

Personally I do think overall it is better for the earth to be in a crowded city environment. Better for ones health too as there will be more reliance on walking. But I doubt that's going to happen any time soon.

Especially with the way SD is structured and the way people are telecommuting.

I agree ocrenter.
I would add that the car culture is still very much part of American life.

San Diego is different, built on a north south axis with downtown, not at the center of the region, but off to the side.

Generally speaking, I think that demographics shifts will actually help "glamour" cities such as San Diego. But suburbs of non glamour cities will be hurt. Educated people want to live in or near cities with excitement and culture.

Suburbs of Cities such as Macon, GA or Wichita, KS, Fort Wayne, IN, will be hurt. But Plano, TX, Irvine, Lake Forest, Temecula will be fine because they are close to large metropolitan areas.

Agree with you Brian and ocr. That is why so called experts like Shiller with their blanket statements sell newspapers but dont reflect reality.

Submitted by bearishgurl on March 28, 2012 - 2:35pm.

AN wrote:
...FYI, Fresno, Bakersfield, etc. did not "sprung up" in the last decade. They've been there for many many years. I can bet you Fresno is not going to be a ghost town.

Of course they didn't, AN. And I will admit that there were enough jobs in those small cities to employ their original (year 2000) populations. But you should SEE what's built around them now! You would be SHOCKED!!

It's evident to me here that there are not a lot of Piggs that are as well-road-traveled as I am. I can safely say I've traveled nearly all hwys, large and small in this entire state, some multiple times and some dozens of times.

CA is slowly losing its prized agricultural "foodbasket" to "Big Development." This vast area is THE prime provider of food and commodities to nearly the entire country, ESP for food that cannot be grown elsewhere.

The San Joaquin Valley wasn't meant to turn into a mcmansion megalopolis. The population and job centers to support this type of housing never existed there. It's absolutely horrific driving through these recently-built far-flung tracts in inland counties which were and are extremely hard-hit by distressed properties primarily resulting from sub-prime lending of recent years.

You would have to see it to believe it. It's a dirty shame - CA's darkest secret that never should have happened.

Submitted by briansd1 on March 28, 2012 - 2:48pm.

BG, there's that suburban sprawl and exurban sprawl because it's so hard to build and increase density in already built-out areas.

I'm telling you, if SD doesn't want new houses, Temecula, Fallbrook, Escondido, El Cajon, will. Remember those developer fees you talked about before?

Those avocado groves, orange groves or whatever will be mowed over until they are no more.

Submitted by bearishgurl on March 28, 2012 - 2:56pm.

UCGal wrote:
I remember when Poway was considered a distant burb. Heck - when I first moved to UC (as a kid in the early 60's) it was a distant burb.

I also know retirees who raised their kids in San Diego, kids still live in San Diego, but sold and bought in Murrieta. Wanted a newer home, lower maintenance, quiter, less urban lifestyle.

Lots of exceptions to every rule.

Yes, UCGal, I too, remember when "Poway" was several miles inland from the *new* I-15. It was considered "far-flung" and Poway road was sandbagged for the longest time :=]

If you have noticed, I haven't put TV on the future "ghost-town map" yet (and neither has CNN/Money), lol ....

TV seems to have a lot going for it now in its own right, seems somewhat self-contained and has some light industry and a large casino. And it's not that far of a drive to Riverside or Corona from there.

Not sure though, about the percentage of TV's population who actually commute more than 50 mi one-way to work. Not sure if there are *enough* nearby good jobs to serve that area, ESP for those who live in the more outlying areas of Hemet and Moreno Valley. If these outlying areas are populated by retirees (like Palm Sprs, Indio & Sun City), then close proximity to work doesn't really matter.

There are many "quiet, less-urban" places in CA to retire which are much better-located than TV. Persons nearing retirement who are financially secure won't generally move from a "70 deg avg" area to "90 deg avg" area unless they need or want to be near other family members. In the absence of that reason, what's the point?

Submitted by briansd1 on March 28, 2012 - 3:05pm.

More Americans are living alone than before.

If you live alone, better live in the city than out in the burbs where you need to drive everywhere.

http://www.pbs.org/newshour/bb/social_is...

Submitted by bearishgurl on March 28, 2012 - 3:32pm.

briansd1 wrote:
BG, there's that suburban sprawl and exurban sprawl because it's so hard to build and increase density in already built-out areas.

I'm telling you, if SD doesn't want new houses, Temecula, Fallbrook, Escondido, El Cajon, will. Remember those developer fees you talked about before?

Those avocado groves, orange groves or whatever will be mowed over until they are no more.

NOT!

brian, I can't speak for Fallbrook (except that it is in the General (2020?) Plan for SD County and I can't speak for Temecula. Esco MAY have land left in 92026, however most of that area is very rocky and hilly, some is on a Type-A flood plain and what IS developed is mostly HOA-encumbered SFR tracts (i.e. Lawrence Welk/Mtn Meadow exits). Much of Esco is County and semi-rural. I don't see that changing.

All El Cajon's hilltops are already developed that can be developed. A huge portion of its flat land within the county's general plan (92019) is zoned 1 unit per AC (sorry, NOT going to CHANGE)! The rest was built with HOA-encumbered tracts (i.e. Cottonwood/RSD) 20-25 years ago. 92020 has been zoned SFR, multi-family and comm'l for more than 50 years. The City has allowed in more low-income units here than any other zip code in the county! 92021 has been zoned mostly SFR and comm'l/light industrial for nearly 50 years.

It's already built out.

Now, if you have a yen for "redevelopment," I urge you to find yourself one or more "infill lots" in EC, put your Big Developer Hat on, chain your main draftsperson to your arm and head on up to Ruffin Rd and/or City Hall.

http://www.ci.el-cajon.ca.us/dept/comm/p...

And GOOD LUCK, brian ...

Submitted by The-Shoveler on March 28, 2012 - 4:13pm.

Funny, I was just on the phone with a colleague, said he was coming down to TV to look for future retirement home and spend some time at Pechanga.

Pechanga has to be the biggest draw for newbees comig to TV.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.