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Census finds record low growth in outlying suburbs

Thursday - 4/5/2012, 1:48pm  ET

By HOPE YEN
Associated Press

WASHINGTON (AP) - Living in an outlying Chicago suburb, Jeff Wehrli recalls a heady time not too long ago when city dwellers poured in and developers couldn't build McMansions fast enough. Now boom has turned to bust, as in many of the nation's "exurbs," and Wehrli can't help but wonder when, or if, things will turn around.

All across the U.S., residential exurbs that sprouted on the edge of metropolitan areas are seeing their growth fizzle, according to new 2011 census estimates released Thursday.

Gas prices are discouraging long commutes. Young singles prefer city apartments. Two years after the recession technically ended, and despite some signs of economic recovery, there's a reversal of urbanites' decades-long exodus to roomy homes in distant towns. Indeed, Americans are shunning any moves at all _ the lowest rate in records going back to the 1940s.

The annual rate of growth in American cities and surrounding urban areas has now surpassed that of exurbs for the first time in at least 20 years, spanning the most recent era of sprawling suburban development.

For instance, Wehrli's Kendall County, Ill., about 50 miles southwest of Chicago, the population had more than doubled to 116,000 over the past decade, making it the nation's fastest-growing county from 2000 to 2010. By late in the decade, however, the county's growth had begun to wane amid recession and rising gasoline costs. In 2011, Kendall County's growth stalled at 1 percent, dropping its rate rank to 236th.

"It's going to take a while," Wehrli said, speaking of a local recovery that he acknowledges will never reach the same levels as the previous decade.

It's not just his county. Economists believe the effects of an exurban bust will be long term.

"The heyday of exurbs may well be behind us," Yale University economist Robert J. Shiller said. Shiller, co-creator of a Standard & Poor's housing index, is perhaps best known for identifying the risks of a U.S. housing bubble before it actually burst in 2006-2007. Examining the current market, he believes America is now at a turning point, shifting away from faraway suburbs to cities amid persistently high gasoline prices.

Demographic changes also play a role: They include young singles increasingly delaying marriage and children, and thus more apt to rent, and a graying population that in its golden years may prefer closer-in, walkable urban centers.

"Suburban housing prices may not recover in our lifetime," Shiller said, calling the development of suburbs since 1950 "unusual," enabled only by the rise of the automobile and the nation's highway system.

"With the bursting of the bubble, we may be discovering the pleasures of the city and the advantages of renting, investing our money not in a single house but in a diversified portfolio," he said.

Kendall County was part of an exurban wave in the mid-2000s that helped President George W. Bush to re-election, offering Republicans the hope of a new era of conservative voters sprouting on the rural-urban edge.

Amid growing concerns about the economy, however, the Chicago-area county, like many other exurbs, turned to Illinois Democrat Barack Obama in the 2008 presidential race. Since then, its growth has slipped further.

At the height of growth in 2006, Kendall's county seat of Yorkville issued 1,000 new housing permits for the year and began construction on an 800,000-square foot commercial development with a Target and Home Depot. But these days only about half of the retail space of Kendall Market is filled, and the city issued a mere 35 housing permits last year.

"New home construction couldn't be built fast enough," said real estate agent George Richter, who has worked in Kendall County for more than two decades. "A lot of us in the industry were very, very nervous about how fast and large the annual growth rate and property value were. We knew there's no way that something could continue on."

Wehrli, a longtime Kendall County board member who runs an excavating company, said the signs of the slowdown are most apparent from devalued homes, foreclosures and a general uncertainty among residents. "Our economy has got to get back to the point where people can confidently sign off on a 40-year mortgage," he said.

About 10.6 million Americans reside in the nation's exurbs, just 5 percent of the number in large metropolitan areas. That number for exurbs represents annual growth of just 0.4 percent from 2010 to 2011, smaller than the 0.8 percent rate for cities and their surrounding urban areas. Still, it also represents the largest one-year growth drop for exurbs in at least 20 years.

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