Smart Growth Development Set to Take Off

 
The desire for greater convenience and lower energy costs, combined with shifting cultural preferences, is leading to a steady climb in the demand for housing in more compact, mixed-use “smart growth” developments. Increasingly, buyers are looking not just at the size and quality of a home, but also at the amenities of the surrounding community, including sidewalks and green space, easy access to public transit, and proximity to shops and other businesses.  

Especially among younger and more affluent Americans, there is a growing trend towards seeking a sense of place and community, which includes knowing the neighbors, buying local produce at farmers’ markets, and being able to walk and bike to parks and other public spaces. These consumers also tend to support the protection of natural resources by steering new development away from open space and farming areas. People in this group are frequently drawn to “smart growth” neighborhoods, or densely built communities with a mix of housing and businesses, and more public transit links than conventional suburban developments offer.  

The results of a national survey released by the National Association of Realtors (NAR) in April 2011 showed that Americans increasingly favor walkable, mixed-use neighborhoods, with 56% of respondents preferring smart growth neighborhoods over others that require more driving to and from home, work, and recreation. When considering a home purchase, 77% said they would look for neighborhoods with pedestrian-friendly features, and 50% want improvements to existing public transportation, rather than more new roads and developments. More than half (53%) agreed that preserving farms and open spaces should be a priority.

The findings also showed that many home buyers are willing to sacrifice square footage for less driving: 80% of those surveyed said they would prefer to live in a single-family, detached home without a longer commute, but 59% said they would choose a smaller home if the commute was 20 minutes or less. Two-thirds (66%) said easy walking to places in their community is an important factor in deciding where to live, with a majority favoring being able to walk to a grocery store (75%), pharmacy (65%), hospital (61%), and restaurants (60%).

From the perspective of builders, constructing mixed developments that combine residential with retail and commercial uses can be particularly attractive, especially if located close to public transit. There are, of course, some barriers that may be encountered in mixed-use and smart growth development, especially when construction is in existing communities. However, local zoning codes that once required low densities and separation of uses are being changed in many areas, as state and local authorities recognize the economic and social value of mixed-use, walkable communities. While financing for these developments is often structured differently than for conventional residential developments, builders can often get support, and sometimes subsidies, from government agencies that are seeking to promote this type of development.

Although builders face greater restrictions in the type of architectural styles and materials they can use in established neighborhoods, building in an area that is already considered desirable is less risky than constructing a new housing development in an unproven location connected to services and businesses only by car. When these projects are in established neighborhoods, builders can often take advantage of existing infrastructure, such as roads and utilities, although upgrades may be needed.

There are also indications that the prices for mixed-use housing are rising: an Environmental Protection

Agency (EPA) study on smart growth market trends released in February 2011 found that, in nearly 80% of comparisons of smart growth and conventional suburban developments with similar building and property characteristics, housing units in smart growth developments sold for higher average prices per square foot. And in December 2011, the Multifamily Production Index (MPI) of the National Association of Home Builders (NAHB) showed continued improvement for the fifth consecutive quarter for the apartment and condominium housing market, suggesting that demand for non-
single-family housing is strong and growing.

Interest in smart growth communities is expected to increase further, as retiring Baby Boomers downsize their homes in exchange for greater convenience, and Millenials minimize their car dependency for financial and environmental reasons. A recent study by the Urban Land Institute noted that as energy and infrastructure become more important to both residential and commercial customers, young adults are comfortable with smaller homes, and willing to trade living space for an easier commute and better lifestyle. The findings also indicated that homes near hospitals and medical offices will be popular among seniors, especially if they are integrated into mixed-use neighborhoods with shops, restaurants, and services.

Copyright © 2012 MHM Publications. All Rights Reserved.

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