Suburbia Sucks: Americans Choosing Condos over Cul-de-sacs
NEW YORK ( MainStreet) Mowing the yard was never really that much fun anyway. Americans are increasingly trading their backyards for a balcony, moving out of the suburbs and back to the city. It's a trend driven by those who want to walk to work or walk to work-out: young professionals and retiring Baby Boomers.
The latest construction data from the Census Bureau show new single-family home construction gained an incremental 0.2% during March, while multifamily housing soared 4.4%. For the year to date, the gap is even wider: single-family home starts were up 13.2% while multifamily housing construction has risen 32.5%.
High profile investors like Jeff Gundlach are shorting the white picket fence, saying single-family housing is "over-believed and over-rated."
At the recent Sohn Investment Conference in New York, Gundlach, manager of the DoubleLine Total Return bond fund, said multi-family housing such as condos and apartments are diminishing the demand for homeownership.
"Renting is more appealing across all age groups, all parts of the U.S., city, suburb, small town and rural," he said. "This is a generational preference; all young people are scarred by the housing crash."
Homeownership rates are at 19-year lows , falling to 64.8% in the first quarter. Noted real estate investor Sam Zell predicts homeownership rates may fall as low as 55% as young adults postpone marriage and families. For the first quarter 2014, homeownership rates were highest among those 65 years and over (79.9%) and lowest for those under 35 (36.2%), according to the Census Bureau.
The lack of enthusiasm for traditional home living is fueling the growth of America's cities, too. U.S. metro areas with populations of 1 million or more grew 1.0% between 2012 and 2013, compared with 0.5% for those with populations of less than 250,000. Metro areas grew faster than the U.S. as a whole for the same period (0.9% compared with 0.7%).
William Frey, a demographer at the Brookings Institution in Washington, says the trend is "180 degrees" from what was seen during the last decade.
"The prognosis does not look good for much of small town America -- with the exceptions of a handful of energy boom towns and retiree magnets," Frey writes in an analysis. "As badly as some regions have fared during the post-recession period, the new statistics show population decline in smaller areas, increasing large metropolitan area dominance."
Frey says the population living entirely outside metropolitan areas -- nearly two-thirds of the nation's 3100 counties -- shows an actual population loss for the third year in a row.