Exurbs Undermined by High Gas Prices and Fall in Immigration

Lots for sale are advertised in a new exurb of Dallas November 17, 2006 in Frisco, Texas. (Photo by Brian Harkin/Getty Images) (2006 Getty Images)

WASHINGTON – High gas prices and slowing population increases have undermined the outlying suburbs that sprouted in the 2000s, but are now seeing growth fizzle to historic lows.

Compounding the problem of 'exurbs', as these areas are called informally, the fall-off in immigration to the country has hit the outer suburbs the hardest.

The latest census data shows an overall U.S. growth rate in 2011 of 0.9 percent, the lowest since the mid-1940s, due to fewer native births and less immigration. The census also shows that fewer people are also moving around within the nation's borders — just 11.6 percent of the nation's population moved to a new home, the lowest since the government began tracking such information in 1948. That means fewer people are migrating to residential hot spots in the suburbs or Sun Belt metro areas such as Las Vegas, Phoenix and Atlanta, upending several of the population trends of the 2000s.

While Metro areas showing renewed growth or slower losses last year included Los Angeles, Miami, Seattle and Detroit --thanks partly to the influx of immigrants-- where steep population drops in the downturn have largely bottomed out.

New census estimates as of July 2011 highlight a shift in population trends following an extended housing bust and renewed spike in oil prices. Two years after the recession technically ended, and despite faint signs of a rebound, Americans again are shunning moves at record levels and staying put in big cities, while falling immigration levels are also deflating the economy of outlying areas.

That is posing longer-term consequences for residential "exurbs" on the edge of metropolitan areas.

Construction of gleaming new schools and mega-malls built in anticipation of a continued population boom is cutting back. Spacious McMansions offering the promise of home-ownership to middle-class families sit abandoned or half-built. Once an escape from urban problems, suburban regions hit by foreclosures are posting bigger jumps in poverty than cities.

The result: 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 modern era of sprawling suburban development.

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"The heyday of exurbs may well be behind us," Yale University economist Robert J. 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 2006-2007. Examining the current market, Shiller believes America is now at a turning point, shifting away from faraway suburbs in the long term amid persistently high gasoline prices.

Demographic changes also play a role: They include young singles increasingly delaying marriage and childbirth 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" and 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."

The signs of longer-term bust are evident in places such as Kendall County, Ill., an outlying suburb of 116,000 people located about 50 miles southwest of Chicago. The nation's No. 1 fastest-growing county from 2000 to 2010, Kendall was part of an exurban wave that more than doubled Kendall's population and helped lift GOP presidential candidate George W. Bush to victory in 2004, offering Republicans the hope of a new era of conservative voters sprouting on the rural-urban edge.

By the late 2000s, however, Kendall County's growth began to wane amid recession and rising gasoline costs. The county, like many other exurbs, eventually turned to Illinois Democrat Barack Obama in the 2008 presidential race for economic answers. By 2011, Kendall County's annual growth had stalled further at 1 percent, dropping its county growth-rate rank to 236th.

Things were especially turbulent over the past 10 years for real estate agent George Richter, who has worked in Kendall County for more than two decades.

"New home construction couldn't be built fast enough," he said. "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." Now, he said, there's little new construction.

Jeff Wehrli, a longtime Kendall County board member who runs an excavating company, said the signs of the slowdown are most apparent from devalued homes, foreclosures and a general uncertainty among residents.

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"It's going to take a while," he said, speaking of a local recovery that he acknowledges will never reach the same levels as last decade. "Our economy has got to get back to the point where people can confidently sign off on a 40-year mortgage."

About 10.6 million Americans reside in the nation's exurbs, just 5 percent of the number in large metropolitan areas. That number represents annual growth of just 0.4 percent from 2010, smaller than the 0.8 percent growth rate for cities and their surrounding urban areas. 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., located on the outskirts 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 $1 higher.

Other areas showing big slowdowns are Pinal County outside Phoenix; Barrow, Paulding and Pike counties near Atlanta; Union and York counties outside Charlotte, N.C.; and Sandoval County near Albuquerque, N.M.

"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 H. Frey, a Brookings Institution demographer who analyzed the census data.

Over the past decade, the number of poor people living in the suburbs of major metro areas grew 53 percent, compared with 23 percent in cities. Suburbs were also home to roughly one-third of the nation's poor population, outranking cities and rural areas.

Based on reporting by the Associated Press.

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