The latest new voice suggesting city centers are the place to be: Fitch Ratings.  In what Joe Cortright calls “maybe the most under-reported story of the year” for urbanists, the investment rating agency shows housing demand shifting towards urban centers “in nearly every city analyzed.”

According to Fitch, downtown home values maintained the advantage throughout the crash and recovery.

According to Fitch, downtown home values maintained the advantage throughout the crash and recovery–and show no sign of slowing down:

Significant demand is returning to city centers following decades of suburban and exurban growth. Since 2000, home prices have grown 50% faster in urban centers than in the broader MSA areas, with population growth trends beginning to favor city centers as well. ‘This demand shift implies that city centers will continue to see growth even where regional prices have been stagnant, such as Atlanta or Chicago,” said Director Stefan Hilts.

More supply will come online with Dan Gilbert's acquisition today of the long-vacant Book Building...but only after years of renovation.

More supply will come online with Dan Gilbert’s acquisition today of the long-vacant Book Building…but only after years of renovation. (photo by Flickr user gab482)

As Cortright points out, this is a powerful signal that the market wants not just more housing in our great urban neighborhoods–it wants more great urban neighborhoods. I previously covered that survey by the National Board of Realtors showing that 25% of Americans are living in single-family homes even though they’d prefer to live in an attached home in a more walkable neighborhoods: the report from Fitch shows people are willing to put their money where their mouths are.

This is why it’s so important that we invest in placemaking, in “Redevelopment Ready” practices, and in transportation choices like transit, biking, and walking. Michigan can’t afford to go slowly when it comes to bringing our supply of great places up to where the demand is.

When my wife and I bought our home, we were hoping to find something like a duplex or condo in walking distance to downtown Ypsilanti–to no avail. While there were dozens of single-family homes available at the time, only one duplex came up in 6 months of looking, and the condos available were all in complexes on major roads towards the edge of town. We ended up in a single-family home as the best-available choice, rather than because it was what we really wanted.

A new study by the National Association of Realtors and Portland State University suggests this is a common problem. Among other topics, their Community & Transportation Preferences Survey of 3,000 adults across the country’s metro areas looked at the homes (and places) people live in currently vs. the homes they’d like to live in.

A full 25% of respondents reported that they currently lived in detached, single-family homes, but would prefer to live in an apartment, townhouse, or condo in a more walkable neighborhood.

NAR_HousingMismatch_July15Even though I’ve personally suffered from this particular failure of the housing market, this number is still surprising and significant: 1 in 4 adults living in our major metro areas would give up their single-family home to live in a more walkable neighborhood.

So why don’t they already live there?  The NAR study doesn’t delve into that question, but it’s a safe bet that lack of available supply plays a role.  The survey shows that nearly half of respondents, across age groups, would prefer an “attached” home in a walkable neighborhood over a single family home that requires more driving.  Yet across Michigan’s metro areas, only about 30% of housing units are attached of any kind, and a large share of those are in locations that could hardly be called “walkable”: massive complexes of bland beige-carpeted apartments sandwiched between strip malls on busy arterial roads are not what these respondents have in mind.

As further evidence of this supply/demand mismatch, where we do have quality multi-family home options in walkable downtowns and neighborhoods, Michigan is grappling with affordability problems: whether Midtown Detroit, downtown Grand Rapids, or downtown Royal Oak, housing options are scarce but highly sought-after, and prices are rising accordingly. Nearest to me, downtown Ann Arbor apartments are now leasing for as much as $2,000 per month, for a single bedroom: even the hundreds of new apartments being built every year can’t seem to make a dent in the pent-up demand for this living option.

While much coverage of the study focuses on millennials, the findings appear to hold up across generational cohorts:

Across generations, about as many Americans want attached homes in walkable locations as want detached homes in conventional developments.

Across generations, about as many Americans want attached homes in walkable locations as want detached homes in conventional developments.

Realtors obviously have a direct role in getting people into the homes they want, and when they say “more and more homebuyers are expressing interest in living in mixed-use, transit-accessible communities,” they’re in a strong position to know what homebuyers want, and how the market is failing them.  Helping to correct this market failure and create more of the places that people wish they were living in is one of the most important outcomes that our placemaking work can have.