Smart Growth: Bumper-to-bumper Buyers

Practitioners tap into the search for alternatives to traditional suburbs.

October 1, 2006

A dozen or so households are waiting for Craig Della Penna to call them with news about available houses, an enviable position for any real estate practitioner. His secret? He has a line on one smart-growth trend he doesn’t believe is going away anytime soon.

Della Penna specializes in selling homes near old railroad tracks that have been converted to trails for biking and walking, a conversion known as “rails to trails” that is expected to grow throughout the United States in the years ahead. As baby boomers—with their focus on health and recreation—near retirement, Della Penna expects his waiting list to grow.

“There are 180,000 miles of abandoned railroad corridors around the country, and about 13,000 of these miles have been converted to trails,” says Della Penna, a sales associate with The Murphys Inc., REALTORS®, in Northampton, Mass, and a 20-year veteran of the railroad industry who has written several books on the rails-to-trails movement. “Not all of these tracks are appropriate for conversion, but probably around 30,000 miles of them are, and there are a lot of people—many of whom are tired of living in the suburbs and spending hours commuting in congested conditions—who want to live by them.”

Homes near converted tracks aren’t the only places being sought out by aging boomers and other refugees from the suburbs. Rhett Reader IV, a sales associate with RE/MAX Platinum in Hartland, Mich., is putting his money on the growing number of “conservation developments” that are going up. These developments put a premium on open space, walking trails, and the retention of the natural contours of land.

In mid-August, Reader was acquiring land for what he expects to be a 40-acre conservation development with 12–15 homes. “A lot of people are asking me when units will come up for sale,” he says.

New buyer mindset

Della Penna and Reader believe they’re in the vanguard of a shift among households that are retreating from classic outer suburban–styled developments and looking for smart-growth–styled alternatives. These are neighborhoods that buck the trend of large houses on large lots far out from the metropolitan core that leave households car-dependent.

Fifty-five percent of households in a smart-growth study NAR commissioned in late 2004 say they prefer to live in what was described as a smart-growth community—public transit options, sidewalks, mixed-housing styles, among other things—rather than a traditional suburban setting far out from the metropolitan core.

The study was a first for NAR, so it’s not possible to measure that response against households’ attitudes in the past, but other research suggests the preference for smart-growth communities is on the rise.

“The concept is catching on,” says Richard Rosan, president of the Urban Land Institute, whose group has been studying the issue for years. “Whether it’s building in-fill housing downtown or building more mixed-use projects in the suburbs, the focus in land use is shifting.”

Smart-growth analysts like to point to 1998 as one of the watershed years for the movement. That’s when voters in 20 states approved more than 100 smart-growth measures on ballots.

But smart-growth initiatives did well in 2005, too. Among other things, voters approved 23 of 31 ballot measures in 11 states to start bus and rail lines, for a total of $40 billion in non-car–related transportation improvements, according to the Urban Land Institute.

Even Congress has developed a taste for the kind of transit projects that are key to the success of smart growth. In 2005 transportation funding legislation, Congress authorized more than $50 billion for transit projects through fiscal year 2009, a record, according to the American Public Transportation Association.

Part of the reason for the influx of money from Congress for transportation is simply that the country’s interstate highway system, begun in the 1950s, is now largely complete, freeing up money for other things, say NAR analysts.

But beyond that, city leaders are pressing the federal government for transportation money because they increasingly feel their cities won’t be competitive in a global economy without strong transit systems, particularly light rail.

“Cities see light rail as a badge that shows they’re a world-class place,” says Timothy Lovain, a transit specialist in Washington, D.C., who helps state and local governments compete for a share of federal transit dollars. Lovain pointed to Phoenix and Salt Lake City as among the car-oriented western cities that have gotten the light rail bug in recent years.

Economic driver

There are also federal dollars going toward rails-to-trails conversions. So neighborhoods next to old tracks could see a new lease on life as lifestyle-conscious baby boomers buy and then upgrade houses that have long been neglected.

About five years ago, Della Penna bought a house eight feet away from what was once a track for the New Haven & Northampton Railroad line and is now a trail popular with strollers, bicyclists, and in-line skaters. The house was run-down, but he and his wife saw so much potential that after renovations they turned it into a bed and breakfast. “I’m now an innkeeper as well as a real estate salesperson,” he says.

Della Penna, who’s been in real estate since 2004, is trying to establish himself as a go-to person for homes near trails. He has closed transactions on at least 15 homes near trails since he entered the business. That number might have been higher except for the shortage of inventory, he says. “People are choosing a neighborhood along a trail, but I still have to find them a house that meets their needs.”

Sharing the best

Households interested in Reader’s conservation development in Michigan, which is still in the planning stages, are animated by much the same mind-set as those buying near trails. “They’re attracted to the park-like setting, the woods, and the trails,” says Reader. “It seems like that’s what everybody wants now.”

Under his plans, the best natural features of the property—a pond, the wooded areas, a meadow with natural wildflowers—will be preserved as common space and accessible by trails. The homes will be laid out in unobtrusive clusters in the less pristine areas.

Given the nature of other developments in Reader’s area, the park-like setting and trails aren’t what developers previously thought households wanted. The surrounding developments reflect a traditional suburban style of large homes on large lots laid out on a grid with big driveways and no sidewalk, characteristics reflective of the area’s car culture.

For all its green space, Reader’s conservation development won’t make much of a dent in that culture. The land is 45 minutes from Detroit, where many of the area households work, so his buyers would still be car-bound commuters. But Reader hopes to apply his idea to closer-in areas once this first project is complete.

“People are just looking for choices,” he says. “We’re giving people alternatives to the traditional suburban development. As these catch on, the choices will grow.”

Seeing smart growth first-hand

More than 30 real estate practitioners in the Akron, Ohio, area took in a bus tour this past summer that the Akron Area Board of REALTORS® hosted with the local homebuilders group to showcase what successful smart-growth communities look like.

“The goal was to educate our members with real-world examples of the philosophies driving smart-growth,” says Sandy Naragon, CEO of the Akron board. “The benefit was the excitement generated when our members were exposed to truly unique developments in their own backyard.”

Akron is one of two dozen local boards that have tapped assistance from NAR under a smart-growth action grant program it launched in 2005. Under the program, NAR awards up to $3,000 to help fund efforts by local boards to educate their members about smart growth or get involved in local smart-growth activities.

NAR funded 18 applications this spring and is now processing more applications under a fall round that closes Oct. 6. Another two rounds are expected to be held in 2007.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.