New Urban Centers Sub for the Suburbs in the American Dream

The makeup of the American household is changing. The birthrate is falling, people are getting married later, baby boomers and senior citizens are aging America. Millennials don't want the neighborhood their parents had, but they might move back in with their parents until they can afford to live in the one they want. These factors are changing where and how we want to live, and reversing the trend of half a century ago of leaving the city for the suburbs. But there's also a third way -- it splits the difference between the choice of living in a traditional suburb or the central city.

"Suburbs were built because people wanted yards and a pool for their kids," says Leigh Gallagher, author of the recent book, The End of the Suburbs. "When that becomes a priority for a smaller percentage of the population," then that changes our need for the suburbs, she adds.

The suburbs evoked a certain way of life -- white picket fences and cul-de-sacs, soccer moms and bake sales. The 'burbs are where the upwardly mobile lived. They fled the inner cities for a better life -- to fulfill the American dream. But the price could be 30-minute, 60-minute, and in some places 90-minute commutes to work. For many, life became more about the drive and less about the family and the community.

"The suburbs were poorly designed to begin with," Gallagher says in her book. "People live far from each other and far from their jobs." Sure, some people still want a front yard --- and backyard, and two- or three-car garage, but many others want to be able to walk to stores and walk along a Main Street. "The size of the house is not as important today," she tells AOL Real Estate. "A walkable neighborhood is more important than a three-story foyer."

As home prices fell after 2006, more people started moving back to the cities -- closer to work. Changing family demographics aided the shift. Since 2000, building activity has decreased in the suburbs and risen in the cities. In Portland, 38 percent of building permits were in the city compared with 9 percent in the early 1990s. The Toll Brothers development company says its "suburban move-up" houses are about 50 percent of what it builds and sells, down from 70 to 80 percent a few years ago.

"The suburbs are built for life with kids," Gallagher writes, "and we're not having nearly as many of them." Families with children used to make up more than half of the U.S. households, but will comprise only about a quarter in 2025, she predicts. The number of households in the ages 30 to 45 have decreased, and so have the number of households of married couples with children. Together they have decreased in number by 3.5 million, and the number of single-person households are multiplying. According to Gallagher, 61 percent of households now have just one or two people and the number of households age 55 and older grew by 9 million between 2000 and 2010.

About the same percentage of people want to live in cities as suburbs, but far more currently live in the latter, according to the Pew Research Center. "The result has been skyrocketing rent and property values in places like San Francisco, New York, and Washington, D.C., wrote the Daily Beast. Millennials may be the most city-loving generation in recent history -- 77 percent want to live in an "urban core," according to an oft-cited survey from real estate firm Robert Charles Lesser & Co. -- but they're also the generation most likely to be living in their parents' basements.

Many of America's 80 million millennials, those born between 1977 and 1999, still live at home -- even as adults -- and when they do leave, they flock to urban areas, Gallagher says. Millennials are also eco-friendly, as are a growing number of Americans. This means the idea of commuting by car in rush-hour traffic for over an hour is not how many want to spend their time or their gas money.

A National Association of Realtors study found that 62 percent of millennials said they'd rather live in a neighborhood near transportation and entertainment than in a community with large lots and no sidewalks. "We don't hate the suburbs we just hate to be bored," said one millennial Gallagher wrote about in her book.

Small apartments in New York City, San Francisco and Chicago, Seattle and Boston are being built to appeal to millennials who prefer urban areas but might not be able to afford much space. One researcher whom Gallagher spoke to predicts that by 2025 there will be a surplus of 40 million large-lot homes. Also by then, an estimated 72 percent of American homes will not have any children living at home, and that figure could be as high as 80 percent in the suburbs.

But as more Americans move back to the cities, prices there naturally continue to rise. One solution: Make suburbs more "urban." "There are hundreds of communities where they are trying to urbanize. ... have a walkable, pedestrian feel," says Gallagher, who lives in Manhattan's West Village but grew up in in a 1923 stone Colonial in the Philadelphia suburb of Media, Pa. (where her parents still live).

AOL Real Estate took a look at some of the communities Gallagher highlights in her book. These are the new urban areas. "New Urbanism" consists of walkable communities in smaller towns and even suburbs, but they are built to focus on a city center -- a Main Street.


More about housing market trends:
Most Young Consumers Want to Buy a Home
Millennials Forge Fresh Trends in Homebuying
Should Young People Buy Homes?

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