Census: Boom turns to bust in outlying suburbs

Living in an outlying Chicago suburb, Jeff Wehrli recalls a heady time not too long ago when city dwellers poured in and developers couldn’t build McMansions fast enough. Now boom has turned to bust, as in many of the nation’s “exurbs,” and Wehrli can’t help but wonder when, or if, things will turn around.

All across the U.S., residential exurbs that sprouted on the edge of metropolitan areas are seeing their growth fizzle, according to 2011 census estimates released Thursday.

Gas prices are discouraging long commutes. Young singles prefer city apartments. Two years after the recession technically ended, and despite some signs of economic recovery, there’s a reversal of urbanites’ decades-long exodus to roomy homes in distant towns. Indeed, Americans are shunning any moves at all — the lowest rate in records going back to the 1940s.

The annual rate of growth in American cities and surrounding urban areas has now surpassed that of exurbs for the first time in at least 20 years, spanning the most recent era of sprawling suburban development.

For instance, in Wehrli’s Kendall County, Ill., about 50 miles southwest of Chicago, the population had more than doubled to 116,000 over the past decade, making it the nation’s fastest-growing county from 2000 to 2010. By late in the decade, however, the county’s growth had begun to wane amid recession and rising gasoline costs. In 2011, Kendall County’s growth stalled at 1 percent, dropping its rate rank to 236th.

“It’s going to take awhile,” Wehrli said, speaking of a local recovery that he acknowledges will never reach the same levels as the previous decade.

Exurban bust

It’s not just his county. Economists believe the effects of an exurban bust will be long term.

“The heyday of exurbs may well be behind us,” Yale University economist Robert Shiller said. Shiller, co-creator of a Standard & Poor’s housing index, is perhaps best known for identifying the risks of a U.S. housing bubble before it actually burst in 2006-07. Examining the current market, he believes America is now at a turning point, shifting away from faraway suburbs to cities amid persistently high gasoline prices.

Demographic changes also play a role: They include young singles increasingly delaying marriage and children, and thus more apt to rent, and a graying population that in its golden years may prefer closer-in, walkable urban centers.

“Suburban housing prices may not recover in our lifetime,” Shiller said, calling the development of suburbs since 1950 unusual, enabled only by the rise of the automobile and the nation’s highway system.

“With the bursting of the bubble, we may be discovering the pleasures of the city and the advantages of renting, investing our money not in a single house but in a diversified portfolio,” he said.

At the height of growth in 2006, Kendall’s county seat of Yorkville issued 1,000 new housing permits for the year and began construction on an 800,000-square foot commercial development with a Target and Home Depot. But these days only about half of the retail space of Kendall Market is filled, and the city issued a mere 35 housing permits last year.

“New home construction couldn’t be built fast enough,” said real estate agent George Richter, who has worked in Kendall County for more than two decades. “A lot of us in the industry were very, very nervous about how fast and large the annual growth rate and property value were. We knew there’s no way that something could continue on.”

About 10.6 million Americans reside in the nation’s exurbs, just 5 percent of the number in large metropolitan areas. That number for exurbs represents annual growth of 0.4 percent from 2010 to 2011, smaller than the 0.8 percent rate for cities and their surrounding urban areas. Still, it also represents the largest one-year growth drop for exurbs in at least 20 years.

By comparison, in 2006 exurban communities grew at an annual rate of 2.1 percent, compared with a population loss of 0.2 percent for inner cities.

In all, 99 of the 100 fastest-growing exurbs and outer suburbs saw slower or no growth in 2011 compared with the mid-decade housing peak – the exception being Spotsylvania County, Va., south of the Washington, D.C., metropolitan area, which has boomed even in the downturn. Nearly three-fourths of the top 100 outer suburban areas also saw slower growth compared with 2010, hurt by $3-a-gallon gasoline last year that has since climbed higher.

“The sting of this experience may very well put the damper on the long-held view among young families and new immigrants that building a home in the outer suburbs is a quick way to achieve the American dream,” said William Frey, a Brookings Institution demographer who analyzed the census data.

The latest census data come amid an overall U.S. growth rate in 2011 of 0.9 percent, the lowest since the mid-1940s, due to fewer births and less immigration following the recent recession.