Are we on the verge of a transition in thinking about what qualifies as a good home location?  For decades, the dream of American homeownership has often envisioned a home with a white picket fence out in the suburbs.

The article "The Tipping Point...When Poverty Moves to the Suburbs." explored the increasing trend in foreclosures and short sales which has led to many home owners who were once thought to be enjoying the "good life" loosing their homes and enduring great hardship due to devastating economic situations.  For many folks, hard times have turned the dream of "living in the burbs" into a nightmare.

Recently, Jonathan Miller of the Matrix blog wrote a thought provoking post entitled "Suburbs are the Next Slums."  In this quote from Arthur Nelson the Director of the Metropolitan Institute at Virginia Tech, he pinpoints a situation which is being observed in neighborhoods across the country...over-building resulting in high levels of homes without inhabitants!

"Arthur C. Nelson, director of the Metropolitan Institute at Virginia Tech, has looked carefully at trends in American demographics, construction, house prices, and consumer preferences. In 2006, using recent consumer research, housing supply data, and population growth rates, he modeled future demand for various types of housing. "

"The results were bracing: Nelson forecasts a likely surplus of 22 million large-lot homes (houses built on a sixth of an acre or more) by 2025-that's roughly 40 percent of the large-lot homes in existence today."

The US population has increased moderately over the last couple of decades.  Yet, builders have built more and more homes with tons more space on increasingly larger lots all over the country.  When I drive past many suburban communities, I see subdivisions half finished, with homes which are clearly unoccupied. 

This is a major shift from most of the past decade in which homes were being built, sold and occupied as soon as the occupancy permit could be obtained.

Today, the new home market in Grand Rapids, Michigan is markedly subdued.  New home starts have fallen dramatically.  Many builders have had to leave the trade.  New homes are now a part of the short sale and foreclosure list which has increased to almost 50% of the sales activity in the area. 

As a home buyer, it is important to be aware of this trend, particularly if you are involved in purchasing a Re-Sale Home.  Most buyers who are considering a older home in a community may not think that they need to be aware of what is happening to the new construction in their neighborhood.  But they should be.  Apart from the fact that they may be missing out on a good deal, a drastic drop in the price of new homes will also devalue older homes as well.  These factors should be considered when making an intelligent offer.

There are other trends which may impact gentrification of downtown areas and precipitate on-going decline in suburban communities.  These include: the increasing cost of gasoline making it more expensive to drive long distances to work, the increase in the cost of food, the rising costs for healthcare and the challenge of job losses in many sectors of the economy. Suburbs are usually bedroom communities...not places where people go to work.  Consequently, inhabitants of outlying communities may be more susceptible to a combination of these types of economic issues.

Americans have had a long love affair with the idea of wide open spaces, where neighbors are greeted with a wave across large stretches of land...if seen at all.  This lifestyle may be seriously challenged in the days ahead. Will, the suburbs become the Next Slums?  Personally, I don't think so.  However, in Grand Rapids, Michigan...some of the most exciting developments taking place in the real estate arena these days involve the downtown area which is being rapidly transformed into a world class cityscape.  Just curious...are you observing any of these trends in other areas of the country?

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