Global Trend

The Booming Exurbs

For decades, American professionals have been struggling with a trade-off. To advance their careers, they typically work in big cities, where corporations are headquartered and jobs are plentiful. However, to enjoy a high quality of life, they live in the suburbs, where the houses are large, the yards are big, and the neighbors are friendly. n their quest to “have it all,” American workers are sacrificing more and more of their most precious resource: time. Ironically, they have less time to spend in their big suburban houses because they’re spending more time in their cars. According to the U.S. Census, the average commute, measured just one way from home to work, increased by roughly 20 percent from 1980 to 2000, from 21.7 minutes to 25.5 minutes.1

And most of that traveling is done by car. The Census found that 76 percent of American workers drive to work alone.

Looking more closely at the Census research, it’s clear that marathon commuting is becoming increasingly common. From 1990 to 2000, the number of American workers who commute from 60 to 89 minutes between home and work jumped 30 percent, from 5 million to

6.5 million people. Those who commute 90 minutes or longer doubled, from 1.7 million to 3.4 million.

If we count the increases in all of the commuting categories over 40 minutes, there are now 6.1 million more American workers who travel at least 40 minutes between home and work than there were in 1990, or 23.2 million in all.

We can’t account for the increases as simply a matter of a larger working population. In fact, the Census found declines in the proportion of people who have the shortest commuting times that it measures ? that is, a smaller percentage of the workforce than 10 years earlier commutes less than 5 minutes, 5 to 9 minutes, 10 to 14 minutes, 15 to 19 minutes, and 20 to 24 minutes.

The 23 million workers with commutes of 40 minutes or longer from home to work are spending at least 6 hours and 40 minutes a week in their cars. And remember, 3.4 million people spend at least 90 minutes each way, for a minimum of 15 hours a week, just to get to work and back.

Now consider the trend we discussed in the April 2004 issue of Trends: “The 40-Hour Work Week Becomes Obsolete.” As we explained, “In most developed nations . . . total work time has moved downward. But not in the United States. Today’s Americans report that they are working even longer and harder than their parents and grandparents. Americans are often viewed as the developed world’s workaholics. We spend about half our waking hours working. Nearly a third of Americans regularly work more than 40 hours a week, and almost a fifth put in over 50 hours. In fact, three years ago America eclipsed Japan to become the world’s most hard-working nation.”

When we combine these two trends, we see why many people feel they never have enough time: Their working hours are increasing and their commuting times are rising. All of which means that “having it all” ? as defined by a job in the city, and a house in the suburbs ? is just an illusion. Yes, the house and the neighborhood may be nice, but most working people are never home because they’re either at the office or in the car.

So what’s the solution? A growing number of workers will opt to move to the exurbs, according to Harry S. Dent Jr., the futurist who uses demographic data to predict the direction of the economy with uncanny accuracy. Whether you’re looking for a better place to live or a profitable real estate investment, this trend is of enormous importance.

Dent believes that 20 percent of the U.S. population, or at least 70 million Americans, will move from the suburbs over the next 50 years. The most popular destination will be smaller towns well beyond the borders of the big cities. These exurban locales offer several advantages over cities and suburbs:

Bigger homes for less money

Lower taxes

Better schools

Less traffic

Safer neighborhoods

Once the embodiment of the American dream, today’s suburbs have become overgrown. They now are afflicted by many of the same problems as cities: rising crime rates, increasing congestion, overcrowded schools, and overpriced real estate.

Among the driving forces behind the trend toward the exurbs are the dazzling improvements in technologies that allow people to work and live anywhere. Thanks to innovations in computing power and satellite communications, people can put in a day’s work without ever leaving their homes ? and they can live hundreds of miles from their company’s office without having to commute.

Dent points out that we’ve seen two similar migrations in the past: from the farms to the cities, from 1875 to 1905; and from the cities to the suburbs, from the mid-1930s to the mid-1960s. Now the third migration is starting, from the suburbs to the exurbs.

How can you spot an exurban community that is poised for growth? Dent suggests that homebuyers and real-estate investors look for the following factors:

A minimum population of 5,000 people, so that there are enough services in the town to attract people from large cities.

A steady growth in population, which indicates that real estate is appreciating. The most reliable way to measure this is not absolute population growth, but growth compared to the rest of the state.

Growth in job markets and a rising level of income, which

signal that enough money is circulating to boost real-estate prices. You can get this information from a demographic marketing firm.

Steady growth in the town’s real-estate prices, which you can assess with listings of home sales prices from real-estate brokerage firms.

Once you’ve studied these factors, you should visit the community to look for first-hand evidence that the town is ready to grow, such as:

The number of opportunities for recreation, cultural activities, and leisure pursuits. These might include community theaters, museums, universities, state parks, book clubs, and so on.

Investments in public facilities and infrastructure by the town. Look for improvements in roads, new sewer systems, larger school buildings, and expansion projects for public libraries. And

Opening of franchises. When Starbucks opens on Main Street and Wal-Mart buys land at the edge of a community, it’s clear that these corporations have studied the area and concluded that the growth potential is worth the investment.

Looking ahead, we offer the following three forecasts for your consideration:

First, by 2030, today’s small towns and farming communities within an hour’s drive of the suburbs of most major cities will undergo explosive growth. This presents tremendous opportunities for real-estate investors and developers, as well as businesses that will serve the growing populations in these communities with everything from dry-cleaning pick-up and delivery services to satellite TV to upscale restaurants to computer hardware sales and software support.

Second, the communities that will boom within the next quarter-century are those that are 60 percent beyond the edge of the suburbs. Using this formula, according to Dent, it is easy to predict the locations of tomorrow’s boomtowns by identifying the ones that fall within the “exurban radius.” To find the exurban radius around a metropolitan area, draw a circle about 60 percent beyond the edge of the suburbs. For example, the suburban sprawl around Los Angeles reaches 60 miles. The best place to invest around L.A. would be 60 percent farther out, or 35 miles past the edge of the suburbs. According to Dent, this region would reach towards Bakersfield in the north, between Ventura and Palm Springs to the northeast, between Pomona and Palm Springs to the west, between Pomona and Escondido to the southeast, and between San Clemente and Oceanside to the south. Or consider a smaller city, such as Phoenix. The suburbs do not radiate out as far from the city as they do in Los Angeles; they extend about 20 to 25 miles. For the next decade, we could expect to see the exurban development spread another 15 miles. Towns such as Carefree, Cave Creek, and Fountain Hills all appear to be promising places for quick growth.

Using this same approach, it’s possible to identify other likely areas for rapid price appreciation.

Beyond New York City: Westchester County, New York

Beyond Boston:

Weston, Massachusetts

Beyond Dallas:

Carrollton, Texas

Beyond Chicago:

Barrington Hills, Illinois

Beyond Seattle:

Mount Vernon, Washington

Beyond Nashville:

Franklin, Tennessee

Beyond Richmond:

Stonewall, Virginia

Beyond Salt Lake City: Grantsville, Utah

Beyond Colorado Springs: Divide, Colorado

Beyond Raleigh:

Dutchville, North Carolina.

Third, many of these exurbs will offer customized communities for Baby Boomers who refuse to live in standardized subdivisions where every house looks the same. These homeowners will want living spaces that reflect their individual tastes and interests, and developers will respond with home designs that offer unprecedented flexibility in floor plans and optional features such as sky lights, fireplaces, and high-tech home offices.

References List :
1. For information about the American workers commuting time, visit the U.S. Census Bureau website at:www.census.gov/prod/2004pubs/c2kbr-33.pdf