As a broker who's looking to position your company to remain competitive and relevant in 2017 and beyond, the suburban market is where you'll want to be.
The suburbs in the top 50 U.S. metro areas accounted for 91 percent of the population growth and 84 percent of the household growth between 2000 and 2015, according to the Urban Land Institute's report Housing in the Evolving American Suburb, which was released earlier this month. What's more, jobs increased by 9 percent in suburbs versus 6 percent in urban areas between 2010 and 2014. The suburbs are where most Americans live and work today, as well as where most residential and commercial development will be in greatest demand in the years ahead.
But "the suburbs" is a broad term, encapsulating a plethora of cities diverse in housing stock, amenities, and distance from an urban center. To drill down a little deeper, one must analyze sales trends and buyer preferences at the local level. But generally speaking, here are some facts to consider as you contemplate market expansion or development opportunities in suburban areas:
All age groups are shopping in the suburbs. According to NAR's 2016 Home Buyer and Seller Generational Trends Report, the majority of buyers in all generations continue to purchase a single-family home in a suburban area. However, the younger the buyer, the older the home they purchase, which means most millennials are often buying in first-ring suburbs, where homes are more affordable and commutes are shorter.
Millennials and baby boomers — especially younger boomers aged 50 to 60 — have similar home wish-list items. According to another study this year by Headwaters Economics, a research group focused on land management and community development, millennials want a suburb with specialty shops, dining options, and a high walkability with sidewalks, bike lanes, and trails. But numerous baby boomers want the same amenities. Hanley Wood, publisher of Builder magazine, and Taylor Morrison, a national home builder and developer, recently surveyed boomer home buyers. They found the top influence on their home purchases is location (50.2 percent), specifically being close to shopping, dining, and medical services. "There's a greater value placed on what's going on outside the house," says John McManus, editorial director of Hanley Wood's Residential Group.
Suburbs with an urban feel take the cake. Marketing the lifestyle of a home and its surrounding location works just as well in the suburbs as it does in an urban market. "Almost all the successful suburbs are building walkable, mixed-use centers," says Ed McMahon, senior resident fellow at the Urban Land Institute. That means focusing on elements such as nearby commercial areas and the local walk score as much as the bedrooms and bathrooms of a home. "The suburbs have evolved far beyond the monolithic bedroom community of our imagination," says Adam Ducker, managing director at RCLCO.
Suburbs are becoming more diverse. Seventy-six percent of the minority population lives in the suburbs, according to the Urban Land Institute. And that trend will only continue: Hispanics are expected to comprise 50 percent of all new home buyers by 2020, according to the State of Hispanic Homeownership Report from the National Association of Hispanic Real Estate Professionals.
Cost of living is lower in the 'burbs. Despite the national median household income being substantially higher in the suburbs than urban areas — $71,000 versus $49,200 — the median home value in a U.S. suburban area is $305,000 as opposed to $365,000 in an urban area. Overall, home values vary greatly by region, but the general suburban affordability trend can be seen nationwide, according to the Urban Land Institute study.
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