Shift From Suburbs to Cities a Costly Move
Daily Real Estate News, Thursday June 12, 2014
More Americans say they want to live near city centers for the shorter commutes and nearby entertainment, marking a shift away from suburban demand, which has driven home construction for decades, The Associated Press reports. But living near city centers is often more costly and may force more Americans to rent, says John Mcllwain, a senior fellow at the Urban Land Institute.
"Middle-class Americans are being squeezed out," Mcllwain says.
Land prices in cities that have attractive amenities is surging, industry strategist and George Washington University professor Christopher Leinberger tells The Associated Press.
The convenience of living downtown doesn't come cheap, though. For example, in Chattanooga, Tenn., the starting price for a townhome development in the downtown area — with restaurants, stores, and a waterfront park — is $610,000. That's nearly three times the average in the metro area.
In 2012, homebuilder Toll Brothers spent $24 million to buy two-thirds of an acre near Nationals Park in Washington, D.C. That's the equivalent of about $830 a square foot. Before the ballpark was there, the going rate was about $5 a square foot for the land.
In Chicago, a complex of 47 row houses luxury development in the downtown area that broke ground last month had every apartment — with units starting at $562,900 — sold before construction even began. Buyers were willing to wait 12 to 16 months before being able to move in.
While 40 percent of Americans live in a suburb “where most people drive to places,” only 7 percent expressed a desire to remain in car-dominated neighborhoods, according to the American Planning Association.
Source: “Many Seek New Homes Near Cities But Are Priced Out,” The Associated Press (June 11, 2014)