Are Builders Building the Wrong Type of Home?

Recent surveys of millennials and baby boomers have shown a preference for walkable, urban, and smaller housing options – pretty much the opposite of a McMansion in a far-off suburb from the city. So why are developers continuing to build sprawling McMansions far away from urban corridors?

Urban planners and “smart growth” advocates are arguing for a drastic change in homebuilding – calling for more compact homes in walkable communities that are located near public transit. Doing so, they argue will jump-start the housing market since that’s what home buyers say they want.

“I think that the building industry has been incredibly resilient at resisting change,” says Chris Leinberger, a senior fellow at the Brookings Institution.

However, some builders argue that home buyers still desire the traditional home and they’re not buying into the belief that the majority of home buyers truly desire compact, walkable developments. Instead, they believe buyers really still crave space – backyards and private patios, big closets, and places to park their big cars.

Indeed, some builders say they’ve tried to build the more urban, walkable communities – but nobody wants them. For example, in Las Vegas, builders say they tried to introduce a sustainable development called Inspirada, billed as a walkable, mixed-use community with compact homes, public parks, and retail. But sales were sluggish. Critics argue that’s because it was in 2007, when the economic crisis was in full swing and nothing was selling.

During the recession, the developers of the community asked city officials if they could abandon the new urbanist concept and revert back to building more traditional homes, with a greater focus on space and luxury than walkability and transit.

While consumer surveys are showing a high desire among the younger generation for small, compact, transit-accessible housing, some critics argue it’s a temporary trend. Once millennials settle down and have kids and pets, they’ll desire a traditional suburban home with more space, just like previous generations, argues Klif Andrews, president of the Nevada division at Pardee Homes.

“Sure, there are people who live downtown forever, but when they say, ‘I want to have a kid or two,’ or, ‘Gee, my girlfriend wants to move in together and we want to have a house,” they’ll move to the suburbs, Andrews told The Atlantic.

Urbanists, on the other hand, maintain the reason home ownership is so low with millennials currently is because builders aren’t producing the right type of housing stock.

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