Last week, Fannie Mae (via MarketWatch) reported that Americans were warming up to the idea of homeownership for the first time in years. After a behemoth of a housing crisis, 73 percent of Americans now believe that it’s a good time to buy a home. If the housing market is ready for a turnaround, prices will only go up, and Americans seem ready to embrace a return to normalcy.
There’s just one problem: there’s a good chance it won’t matter. Aside from the fact that polls like this can be very misleading (last April, Gallup came up with very similar numbers), the housing market faces a demographic problem that isn’t likely to go away any time soon.
Since 2006, exurbs and outer-ring suburbs have been losing residents as families move into large cities in greater and greater numbers. This is first time in decades that many suburban counties have seen a loss in population, reports Urbanland. Part of this has been the housing crisis. Exurbs dotted with subprime developments have been hemorrhaging residents for years, but this won’t go on forever. A greater problem, says John K. McIlwain of the Urban Land Institute, comes as boomers retire. Baby boomers created the strongest demand for housing in American history, but their offspring are not likely to do the same. Generation X is far too small to make a similar impact, and Millennials (the echo boom) so far don’t seem all that interested in homeownership, or suburban living. This means that, even if the housing market gets going again, there’s no chance for demand to reach pre-recession levels.
The larger issue is that suburbanization as a social and cultural process is designed for a bygone era. The postwar years were a deeply unequal period of American history, and suburbanization reflected that, especially in terms of race. Redlining—segregating neighborhoods based on race—was federal policy through most of the postwar boom, and segregation remains a serious problem in many areas. But the 1950s and 1960s was also a time when the environmental impact of development was not really a consideration. With more and more people and local governments interested in transit, cycling, and walkability, car-dependent suburbs seem increasingly out of place.
But what’s really interesting about this trend is that it’s not the result of any actual federal policy. Since the end of World War II, federal dollars planned, created, and maintained suburbia, through public highways, home mortgage insurance, tax deductions for homeowners, and other incentives. As John D. Fairfield points out in 2010’s fascinating The Public and Its Possibilities, in the years following World War II, federal money made suburban homeownership actually cheaper than renting in large cities—at least for the white middle class.
And since then, the fundamentals haven’t changed all that much. The FHA still subsidizes suburban homeownership (albeit more equally), and federal highways and infrastructure still make suburban life possible. Obama has signaled that he’d like to rethink some of these policies, including getting rid of Fannie and Freddie and reducing mortgage subsidies for new buyers, but actual changes are not likely soon. In the meantime, we may see even more people defy government incentives to settle away from urban centers—young people, especially. If these trends continue, cities could look very different over the next generation. Homeownership may remain an American Dream, but suburbs may not.