Surban™ – It’s Not Urban or Suburban

13 Replies

https://www.coachcarson.com/big-shifts-ahead/

Above is a good article and book review from Chad Carson, a BP blogger, on demographic shifts.  I lived the Surban lifestyle and most of my investing has been in a Surban market.  It's an excellent lifestyle...lots to do but it's convenient and still affordable.  Not having professional sports is a drawback but that does not matter to many people and the trade offs are worth it for me.

Feel free to reply with any feedback or thoughts on the article, demographic trends, and whether or not they have influenced your investing.

Very Interesting, thanks for sharing @Mike Dymski

1) I would identify the Laurens road corridor with Parkins Mill, Gower & now Nicholtown, as a great example of an established Surban™ area here in Greenville, SC. West Greenville, Poinsett Highway (Sans Souci /TR)  are likely to capture a large part of growth in coming years as schools improve. 

2) One thing not referenced is the impact Southern migration has on home values. Outside of supply /demand drivers it seems buyers are willing to pay a much higher price for homes when coming from more expensive ( home prices & taxes) northern states.  This drives values up/  adds another obstacle for what would be millennial home buyers, which strengthens the home renting norm. 

My two cents. Open to feedback.

Originally posted by @Mario Brown :

Very Interesting, thanks for sharing @Mike Dymski

1) I would identify the Laurens road corridor with Parkins Mill, Gower & now Nicholtown, as a great example of an established Surban™ area here in Greenville, SC. West Greenville, Poinsett Highway (Sans Souci /TR)  are likely to capture a large part of growth in coming years as schools improve. 

2) One thing not referenced is the impact Southern migration has on home values. Outside of supply /demand drivers it seems buyers are willing to pay a much higher price for homes when coming from more expensive ( home prices & taxes) northern states.  This drives values up/  adds another obstacle for what would be millennial home buyers, which strengthens the home renting norm. 

My two cents. Open to feedback.

Well said Mario.  I consider all of downtown Greenville and most of the gentrified surrounding areas to be Surban.  Most of my investing has been in North Main and the Augusta Road areas...urban lifestyle but good schools, affordable living, and convenience to everything...it's a gem.

Regarding #2, yes our redneck homes are pretty affordable for many northerners...my neighborhood is mostly transplants and foreigners.

Mike thanks for sharing.. I remember back in the mid 80s when an article like this came out and said the Pac northwest was going to grow at rates unseen in the past.. well that was when  timber aerospace and farming dominated the area.. us CA residence thought what the heck it rains there all the time nice in the summer but really... Well 30 years later that article was right on.. not sure if it knew Mircrosoft and Amazon were coming and or that Oregon would be destination number one for folks wanting out of CA..  And that instead of Timber Intel would be the largest employer in the state.

Now in this area that trend they are talking about in the article has not happened.. Inner city millennial buyer is dominating, suburbs for move up houses ( that we build is still red hot)..

What I do like those is the Carolinas specifically Charleston  I found that city about 5 years ago and it was coming out of the 08 melt down.. but I was keen on Boeing and being around aviation all my life I thought the Dreamliner was going to be a huge hit and when they moved it all to Charleston.. and Boeing bought 1000 acres around the airport.. I thought HM .. well even with no sports teams Charleston is booming.. but its mainly inner city and newer construction..

North Charleston that is were the airport is.. is transforming and I would see that being an area the article is talking about.. one downtown strip in N Charleston just since I started investing there has gone form board up to about 10 restaurants  a few brew pubs and brought inner city out to what was an area the locals thought of as a poor area..  just my little company has built about 20 new builds there and prior to 2012 there was NO new construction.. or very little.

But follow the jobs  follow the weather  and right to work states.. at its core that's shift is still going on and will continue FLA with NO state income tax will continue.. And out west here I see Vegas as something that is going to really blossom again.. no state income tax.. get the over flow from CA  weather and sports teams and all other manner of things to do and a great airport so you can get all over the country or go international.

However lastly as I travel through the country.. Pretty much every big metro city save a very few is seeing urban renewal at rapid paces and if you can position yourself there those make for nice investments..

@Mario Brown   your right on the price move up in SC.... my first new build 5 years ago in Charleston went for 350k  now that same new build infil is going 550 to 650k  same sq ft same quality.

I first bought lots for 40k now I am paying 150k.. :)  boy I should have bought every 50k lot I could have got my hands on .. but I was from Oregon did not really know.. and it was a huge leap building new construction next to houses that were literally falling down.. Charleston is a very unique area..

@Mike Dymski I love this article and topic, and see all these things to be true in my Pacific Northwest area (can't comment on the south stuff). My husband and I moved away from Seattle (he had never lived outside of the hot Seattle neighborhood of Ballard) to a smaller town (20k people) two counties north. Anacortes is a thriving town with a good downtown and enough amenities. While there are plenty of county roads here, where do I want to live? Just a couple blocks from downtown! It's quaint and safe and walking distance to the school and stores. I'm a big believer in this Surban life, as I see more and more young people from Seattle moving to this town because it is charming and affordable.

As far as people renting, I don't see that in Surban, but I do see that more in urban. I would never ever buy in Seattle, I would just rent. But here in Anacortes, I want to buy all the houses! (especially as these close to downtown lots allow for multifamily hacks) 

Originally posted by @Mike Dymski :

https://www.coachcarson.com/big-shifts-ahead/

Above is a good article and book review from Chad Carson, a BP blogger, on demographic shifts.  I lived the Surban lifestyle and most of my investing has been in a Surban market.  It's an excellent lifestyle...lots to do but it's convenient and still affordable.  Not having professional sports is a drawback but that does not matter to many people and the trade offs are worth it for me.

Feel free to reply with any feedback or thoughts on the article, demographic trends, and whether or not they have influenced your investing.

 I'm not buying that "surban" stuff.

I never liked reading about these predictions of the future that only look at the habits of the upper middle class and white collar.

Here are some trends I see happening that do not focus solely on the upper middle class. The middle and lower class citizens will be priced out of expensive markets. We are already seeing this in places like California.

There will be a shift of the lower class from the city to far-flung outskirts of the cities. It will be less expensive to build housing on the outskirts. Not only that but you are far less likely to face community protests, hard zoning regulations, and ridiculous fees and taxes that make developing affordable housing in many cities too expensive.  Keeping that in mind, that is the only place where it may be profitable for developers to build affordable housing.

Really good post and article. I am going to get the book series just to read them myself. But it just makes sense to invest and follow the jobs, weather and access to travel. Millennial's are a much larger demographic group then even the baby-boomers, and now they are getting better jobs, in relationships, getting married, having kids, and now moving to the suburbs. Follow the migration and be ahead of it. But also know the your target market and if they can afford those areas. Depending on the city, I do like the urban redevelopment push (heck I even live in one out side of Portland), as well as @Anthony Gayden point of looking on the outskirts of the cities and suburbs were the raw land is to build and cheeper taxes, fees etc. Which is what I am doing now. Looking in the farther suburbs that need to be re-developed and where the young urban professionals will be looking to purchase their starter homes, or rent. But my target for REI is Millennial YUPPIE's establishing themselves.

@Anthony Gayden   insightful  post ... affordable housing in the northwest is an Oxymoron.

given govmit regulations and systems development charges .. price of land.. there is no such thing as new construction affordable housing.. Unless is subsidized.. this is another reason the south especially places like Texas are growing they build for half of what it cost us..

when I Have to spend.. just under 100k before I have even bought the land to take dirt to make it shovel ready and go vertical.. there is no way we can sell homes for less than about 350k in this market.. starter homes are the older fixers or some townhouse attached housing that the big builders IE Lennar can slap up.. they can build cheaper than us of course.

I live in a "surban" like place. These have become very popular in the DC area.  Many of them are entirely new construction downtown areas in the suburbs.  It is like a little minicity that sprung up out of nowhere with a downtown area with bars, restaurants, shopping, surrounded by a mix of single families, townhouses and condos.  They are incredibly popular here, and quite expensive.  Id say the majority who buy in them are aged 30-50, married with high incomes, and are just past the point in their lives you are in in your twenties and used to live in downtown in 500 sq foot apartments.  You want the same amenities, but want to live in a nicer place, and want access to the good schools the suburbs provides.

Originally posted by @Jay Hinrichs :

@Anthony Gayden  insightful  post ... affordable housing in the northwest is an Oxymoron.

given govmit regulations and systems development charges .. price of land.. there is no such thing as new construction affordable housing.. Unless is subsidized.. this is another reason the south especially places like Texas are growing they build for half of what it cost us..

when I Have to spend.. just under 100k before I have even bought the land to take dirt to make it shovel ready and go vertical.. there is no way we can sell homes for less than about 350k in this market.. starter homes are the older fixers or some townhouse attached housing that the big builders IE Lennar can slap up.. they can build cheaper than us of course.

 Very true, it is nearly impossible to build affordable housing in many places. We are seeing some people doing mega-commutes. My guess is this is primarily middle class people with decent jobs. Teachers, police officers, etc. who can't afford to live in expensive central cities.

Those who can leave will seek more affordable alternatives. The high speed rail in California may open up a lot of affordable housing in far flung areas to lower income people helping to alleviate the problem temporarily. It could end up being a good case study for future development.

@Anthony Gayden   you know I don't know how people on the SF peninsula that do mid level to low level jobs are living these days.. with the rents and cost of real estate. that's a good point.

the train is a LOOOONG way off.. but people have been commuting long distances in CA for the last 30 plus years..

when I first started in Portland I used to laugh when buyers would say Ya but that house is 25 minutes out of town  LOL...

I just read recently Inland CA is out pacing CA coastal job growth. Both were strong but for the first time in history Inland Empire and Sacramento were stronger and that was a new thing researchers (UCLA) observed. The state has 16 million jobs and added 235k recently and they were expecting 195k. Heck Pasadena alone has 100k jobs...that is insane when you think about it. I guess we can expect the inland CA areas to grow faster than before. All those inland areas are nearly 100% suburban/surban perhaps. 

Originally posted by @Anthony Gayden :

 I'm not buying that "surban" stuff.

I never liked reading about these predictions of the future that only look at the habits of the upper middle class and white collar.

Here are some trends I see happening that do not focus solely on the upper middle class. The middle and lower class citizens will be priced out of expensive markets. We are already seeing this in places like California.

There will be a shift of the lower class from the city to far-flung outskirts of the cities. It will be less expensive to build housing on the outskirts. Not only that but you are far less likely to face community protests, hard zoning regulations, and ridiculous fees and taxes that make developing affordable housing in many cities too expensive.  Keeping that in mind, that is the only place where it may be profitable for developers to build affordable housing.

Hey Anthony, I think you bring up a really good point and some likely biases in preferences for housing. This book that I summarized, like many others, do focus on upper middle class and upper class trends. Surban is certainly one of those.

But I don't think it has to be either or. I think either way the affordable suburbs will get a big part of the growth. It will just be different priorities and different products that different people will look for. 

@Mike Dymski - thanks for sharing my article! I think these kinds of changes are fascinating for us to watch for and take advantage of as investors.

I found Jay Hinrichs experience in Charleston very interesting. Jay, what kind of margins must you have on those new construction builds to make it worthwhile? Do you look at it as a % profit of retail or do you have some other way to analyze it? 

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