Print Friendly
New Report: Fundamental Real Estate Shift in the U.S.?
The EPA's new report asks whether the U.S. real estate market is making a fundamental shift toward more urban living. Photo by Willamor Media.

The EPA's new report asks whether the U.S. real estate market is making a fundamental shift toward more urban living. Photo by Willamor Media.

Residential construction in urban neighborhoods has accelerated over the past two decades, says a new report from the U.S. Environmental Protection Agency. The 2010 edition of Residential Construction Trends in America’s Metropolitan Regions foresees a fundamental shift in the real estate market driven by changing demographics, increased demand for homes in walkable communities and lower crime rates in central cities.

Specifically, the report found that, in several regions, there has been a dramatic increase in the share of new construction built in central cities and older suburbs. The analysis utilized U.S. Census data showing residential building permits in the 50 largest metropolitan regions from 1990-2008. The number of permits issued by central cities and core suburban communities was compared to the number issued by suburban and exurban communities.

In roughly half of the metropolitan areas examined, urban core communities dramatically increased their share of the residential building permits issued in the region as a whole. In 15 metro areas, the central city more than doubled its share of permits. These increases have been particularly dramatic over the past five years. For example:

  • New York City saw its share of regional residential building permits go from 15% in the early 1990s to 48% over the past six years.
  • The City of Chicago’s share of regional permits rose from 7% to 27% over the same period.
  • Portland, Ore. went from 9% to 26%.
  • Even Atlanta, Ga. the poster child of sprawl, went from 4% to 14%.
The central city share of new residential construction in metro areas whose core communities saw a substantial increase.  Graph: EPA.

The central city share of new residential construction in metro areas whose core communities saw a substantial increase. Graph: EPA.

However, the report stresses that these shifts in residential construction patterns are not occurring evenly across the country. A number of major cities, including Boston, Philadelphia, Minneapolis & St. Paul, Washington, D.C., Baltimore and Atlanta, saw substantial increases in permits, but the central city still represented less than a fifth of regional permits. In other cities, like St. Louis, San Jose, Pittsburgh, Salt Lake City and San Diego, there was little change in the share of new construction taking place in the central city. Although urban core neighborhoods have doubled or tripled their share of residential construction since the early 1990s, they still account for less than half of all new residential units in most regions.

Interestingly, the data from 2008 (the most recent year available) shows the inward shift continuing during the economic downturn, even though the overall number of permits is down in nearly all jurisdictions. It will be interesting to see if this trend has kept up in 2009 and 2010, given a possible resurgence in suburban migration due to low housing and transportation costs. The authors also note that urban redevelopment projects are capital intensive, and the reduced availability of credit and municipal bonds may begin to reduce their pace.

The fledgling back-to-the-city trends reflected in the report have important implications for smart growth advocates. For one, medium-sized cities with advanced growth management and urban infill policies saw more dramatic shifts inward. Whether more city-centric development patterns continue through the recession or not, policymakers who want to encourage them should strengthen their smart growth programs and review the impacts of their land use and transportation policies and practices on where growth occurs. Local regulations and public infrastructure investment priorities can discourage large-scale redevelopment projects. For example, transit-oriented development often requires updates to zoning codes, more flexible parking regulations, assistance with land assembly or improvements to water, sewer and streets. Municipalities that do not attend to these issues may see continued suburban sprawl and will not meet the growing demand for walkable, transit-friendly living environments in the decades to come.

Print Friendly
  • Following up on BrianTH’s point, there is so much housing stock in the city and relatively the suburbs are so empty. I was amazed to learn that the Pittsburgh MSA was rated the most sprawling city in 2006.

    If you’re going to build new, you have much more space in the suburbs. I’d be curious to see the number of modification permits going on in these old city houses. Anecdotally, I’m in the process of adding a second bathroom and bedroom to my city house, but I bought my cheap fixer-upper a few years ago. The 2010 is the first time I’ll be counted officially.

    This comment was originally posted on Null Space

  • BrianTH

    It seems to me the paradigm case of population growth in the City these days is when a young family takes over a decent-sized house that was until recently occupied by a widow, who had raised her own family in that house but then watched them move away after the steel bust. I wouldn’t think counting new units/construction permits is going to serve as a good proxy for that.

    More generally, the steel bust put Pittsburgh on a different track than most other central cities. And I don’t think it will be surprising if as result some metrics that may usually work pretty well for estimating trends in most other central cities don’t work so well in Pittsburgh.

    This comment was originally posted on Null Space

  • I think there are less potholes in a lot of other places too.

    This comment was originally posted on Null Space

  • MH

    You can drink whiskey in the aisles of the supermarkets.

    You lost me on that one. PA’s liquor laws are noticably lousy compared to every place else except maybe Utah.

    This comment was originally posted on Null Space

  • DBR96A

    Phenomena in "other cities"

    – Money grows on trees.

    – There are no taxes whatsoever.

    – There’s always "something to do."

    – There are no potholes whatsoever.

    – Politicians are honest statesmen.

    – It’s sunny 300 days a year, and it never rains on weekends.

    – Everybody’s young, intelligent and beautiful.

    – There are 10 high-paying job openings for every new resident.

    – Nightclubs stay open 24 hours.

    – You can drink whiskey in the aisles of the supermarkets.

    – There are no labor unions of any kind.

    – People only listen to the newest music.

    – There are never any traffic jams, and public transit is always on time.

    – Gas only costs $1.50 per gallon.

    – There is no racism or racial segregation.

    – The temperature is always — always! — 72 degrees.

    – The grass is always — always! — greener.

    – Everybody smiles at each other when walking down the sidewalk.

    – Nobody’s ever in a bad mood, and nobody ever wants to leave.

    – Republicans and Democrats love each other.

    – Jews and Palestinians love each other.

    – Chinese and Japanese love each other.

    – Serbs, Croats and Bosnians all love each other.

    – Russians, Georgians, Chechens and Armenians all love each other.

    – Everybody loves one another!

    Need I go on? Pittsburgh is such a lousy place compared to "other cities!"

    This comment was originally posted on Null Space

  • Interestingly, I took at look at core county population share in the latest census estimates that just came out:

    http://www.urbanophile.com/2010/03/25/census-bureau-releases-2009-population-estimates/

    Pittsburgh was one of only two metros that increased core county share last year. Every place else – including Chicago – lost it. I think the EPA study is seriously flawed as an indicator of "fundamental shifts" in anything.

    This comment was originally posted on Null Space

  • Report: Fundamental Real Estate Shift in the US? http://ow.ly/1sPOI ..increased demand for walkable communities..

    This comment was originally posted on Twitter

  • New Report: Fundamental Real Estate Shift in the U.S. …: The 2010 edition of Residential Construction Tren… http://tinyurl.com/yakm9ds

    This comment was originally posted on Twitter

  • New Report: Fundamental Real Estate Shift in the U.S. … http://bit.ly/amzL9I

    This comment was originally posted on Twitter

  • New Report: Fundamental Real Estate Shift in the U.S. … http://bit.ly/9a0IZt

    This comment was originally posted on Twitter

  • Pingback: Commercial Lenders Troubles Can Be Your Gain – Dean Dretske()

  • “New Report: Fundamental Real Estate Shift in the U.S. …” http://bit.ly/90vdHn Baltimorehud

    This comment was originally posted on Twitter

  • ResRE> http://j.mp/c3rveN New Report: Fundamental Real Estate Shift in the U.S.?

    This comment was originally posted on Twitter

  • Look at this.. New Report: Fundamental Real Estate Shift in the U.S.?: The EPA’s new report asks whether the US re… http://bit.ly/9Jfo4o

    This comment was originally posted on Twitter

  • @epagov New Report: Fundamental Real Estate Shift in the U.S.? http://bit.ly/91rvfX #smartgrowth #cities

    This comment was originally posted on Twitter