Reconnecting America People * Places * Possibility

Are We There Yet? Changes In The Housing Market

Editor's note: One issue discussed in the Living chapter of Are We There Yet? is that changing demographics aren't just influencing political outcomes, they are also influencing the kinds of houses people desire and where they want to live. People want more housing choices and more mobility choices. In many regions, this is translating into an increased demand for rental housing near quality public transportation.

One lesson that emerges from the housing market meltdown is that people need and want more choices — in both urban and suburban locations — especially more affordable choices. If the McMansion typified one extreme, Tiny House blog typifies the other, and offers options for downsizing. This is a trend that has also been tracked on the cover of Dwell: While a 2005 magazine cover was headlined “Small Is the New Big: Homes Under 2,200 Sq. Ft.,” and a 2006 cover read “Think Small: Homes Under 1,700 Sq. Ft.,” the 2008 cover read “Small Wonders: Homes Under 1,000 Square Feet.”

Further evidence of this trend is the Katrina cottage, which ranges in size from 308 to 1,800 square feet and was designed in the wake of Hurricane Katrina as an alternative to the FEMA trailer. The earliest version of the cottage was mobile, like the FEMA trailer, but of higher design quality and for the same $70,000 price. The Katrina cottage, which has gained popularity around the U.S. as an affordable housing choice, can be installed on site from a kit.

The Resilience Of Complete Communities

In a recent article on a spokesman for Wells Fargo, the nation’s largest mortgage lender, noted that while the housing crisis is likely to take a decade to rebound, the places that are seeing gains today are urban areas with infill projects. “We are seeing gains in more and more cities, and builders are more upbeat,” says Mark Vitner, senior Wells Fargo economist. “The gains are small, however, and are often in infill locations or in partially built-out projects near key employment centers.”

These projections are bolstered by studies such as one recently conducted by the Metropolitan Council in the Twin Cities, which has built one light rail line and is building another. The Met Council study shows that residents in the seven-county region are moving closer to the urban core where there’s more transit: While 67 percent of all residential units permitted in the 1990s were single-family houses, the number fell to 44 percent during the past decade. Similarly, while 8.4 percent of development was higher-density and mixed-use in 2010, the study predicts the percentage will increase to 55 percent in 2030.

Met Council analyst John Kari says in the Finance & Commerce newspaper that this shift is the most significant that he’s seen since the council began developing comprehensive plans in the 1970s. He adds that he believes the shift in demand toward apartments, condos, townhomes and small-lot detached housing is permanent.

The popularity of small is likely also due to the fact that household size is decreasing. The new census numbers show that while nearly half of the U.S. population lived in households of six or more people in 1900, by 2000 more than half lived in households of one, two or three people.

The Atlantic article mentioned earlier focuses on the housing market research of Arthur C. Nelson, director of the Metropolitan Research Center at the University of Utah, who offers some provocative ideas about reviving the housing market by providing more choices: Nelson suggests converting McMansions — many of which sit empty — into affordable housing for multi-generational or multi-family households. He points out that while the average 3.5-person home was smaller than 1,000 square feet in 1950; a 6,000-square-foot McMansion is roomy enough for 12, with parking for five or six cars.

Nelson also contends that homeowners could spark a housing boom by retrofitting their current homes to include granny flats, backyard studios, garage and basement apartments. What better way, he argues, to increase density and affordability in neighborhoods near public transit? His studies show that a third of American households want to live where they can own fewer cars but that less than 10 percent can find housing in these locations.


If small is one solution to the problem of affordability, locating housing near good public transportation is definitely another important solution in this era of dramatic gas price increases. Nelson believes the demand for housing near frequent bus lines and rail stations is so high that meeting it would require that every new residential unit constructed between now and 2050 would have to be built near transit. This supports research by the Center for Transit-Oriented Development (CTOD) in 2004 that projected the demand for housing near fixed-guideway stations by 2030 would be 14.6 million households.

Households near transit in smaller regions

Robert Lang, professor of urban affairs at the University of Nevada in Las Vegas, believes that locating housing near transit provides a housing choice that could revitalize the suburbs. Lang has analyzed the fastest growing “boomburbs” in the Sun Belt, and he told USA Today in 2012 that of the 76 suburbs he studied the 43 with rail service — including Plano, Texas, Tempe, Arizona, and Aurora, Colorado — grew faster than those without rail lines. “In the last decade boomburbs grew one way: out,” Lang says. “This decade, large suburban cities can grow up around station stops.” Suburbs and smaller towns can both benefit from locating housing near transit. See chart at right: Households near transit in smaller regions.

The good news is that as the demand for more transportation choices has increased, regions are building more transit lines and more stations. Research by CTOD shows that the number of people who live near “fixed-guideway” transit — either rail or bus rapid transit that runs in a dedicated lane apart from other traffic — increased from 6.2 million households in 2000 to 6.6 million today. See list on opposite page: Top 10 regions with the fastest household growth near transit.

CTOD also found that regions with more extensive transit networks have exponentially more people living in neighborhoods around stations. See chart on page 16: Transit system size matters.

This is not only because there are more transit stations and because the neighborhoods around these stations typically allow taller buildings and higher densities. It’s also because larger transit systems connect residents and workers to more destinations, which make these station area neighborhoods more attractive places in which to live and work. Also, because these systems are bigger they provide greater potential to organize a region’s growth, thereby minimizing traffic congestion — which is key to ensuring that people and goods can keep moving, rather than idling in traffic. And this enhances a region’s economic competitiveness.

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