Historically the U.S. population has been concentrated in larger, metropolitan areas and still is today. Data released by the United States Census Bureau showed incorporated areas are home to nearly two-thirds of the entire population but only occupy 3.5 percent of land area. Even during the early stages of mass immigration when Europeans fled to the United States their first stop was Ellis Island. Yet this trend began to change as a flight to suburbia populated areas outside of major urban centers.

As more and more people vied for the same real estate in larger cities prices began to force consumers to move further away from urban centers. Developers recognized this and began to build neighborhoods just outside of metropolitan areas offering larger homes on larger lots at a cheaper cost. That combination was hard to resist and the concept of “suburbia” was born. In 1947 the Federal Government contracted with William Levitt, whose experience with mass production building housing for military personnel, applied the same techniques to housing.

Levitt was said to have identified 27 different steps to build a house, much like cars were being made in factories on an assembly line. Levitt bought some land on Long Island, New York and after just one year was averaging 36 new houses per day to meet the demand of urban emigrants. The introduction of the G.I. Bill provided various benefits to soldiers returning from WWII as an effort to help them more easily assimilate back into civilian life. One of these benefits was the VA home loan which allowed veterans to buy a home with no money down and restricted closing costs. A few years earlier, FHA loan guidelines were established allowing non-veterans an opportunity to buy a home with a very small down payment, a major change at the time.

Easier financing, lower costs and bigger homes helped transplant urban dwellers to the suburbs. Suburbs are their own micro-city. They have their own schools, entertainment and shopping. There was no need to travel back downtown for such services while roads and rail were built to move suburban dwellers to their jobs in the city where major corporations were still headquartered.

Shopping malls turned into major economic centers as well as a social center for many. Flight to the suburbs later meant lower tax revenue for surviving cities leaving many central cities toward a state of decay. Suburbs were seen not only as a better value but safer as well. Over time, mass transit became more efficient as well in major metropolitan areas allowing for a freer flow in and around the city. But the trend appears to be shifting. In fact, it already has.

Major metropolitan areas such as New York and San Francisco have historically wrestled with affordable housing and other major areas are following suit. For instance, a recent article* gave Detroit as an example. According to the piece, after years of downtown abandonment and deterioration of its downtown areas today there is a resurgence of new apartments. Not only new apartments but new, luxury apartments. In Detroit’s urban areas, there have been more than 20,000 new jobs created in just the past few years and today the residential occupancy rate for downtown Detroit is an astounding 99%.

The Shift

So-called “Millennials,” those aged somewhere around 18–34 have recently replaced the Baby Boomer generation in population.*This population shift was at some point to be expected as baby boomers grew older, exit the workplace and retire. Boomers wallets count for less and less in today’s marketplace.

Millennials however do have control of the purse strings and industries are taking notice. Take for example the once-venerable shopping malls that anchor suburban centers.

Shopping malls are suffering as major anchors announce store closingsnationwide. J.C. Penney recently announced the closing of up to 140 stores by the end of 2017. Sears announced the closing of 150 stores including 108 Kmart locations. Macy’s is following suit closing 100 stores. The trend is real. But what about housing? If populations are shifting back to urban centers, where will they live?

Where do the misplaced citizens who can no longer afford living in urban areas due to the demand for downtown living go? Well, they have to live where they can afford to rent or own and that means moving away from downtown areas and back toward the suburbs. Some cities are considering housing vouchers for those being displaced if income falls below a certain level to help with rising urban rents.

In urban areas there is no shortage of real estate but much of it is in too much in a state of disrepair. Being essentially abandoned and ignored for years, physical structures need more than just a bit of rehabilitation. Traditional banks aren’t in the mood in the current environment to take on the risk of community revitalization. There needs to be someone who will step in first to begin the process.

CDFIs Step Up

The Community Development Financial Institutions Fund, or CDFI, was established to revitalize distressed communities providing financial assistance to lending institutions.

“As the demand for affordable housing in urban areas increases traditional banks may not have the appetitive to be the first at the table,” said Jeffrey Kirsch, Non-Performing Mortgage Expert of Fort Lauderdale, Florida. “CDFIs are set up for that very purpose providing affordable housing as well as bringing urban communities back to their original glory” Jeffrey Kirsch continued.“CDFIs are poised to invest in urban areas and provide necessary funds to groups who don’t have access to traditional financing and are well positioned to develop or acquire affordable housing in these area” Jeffrey Kirsch said.

As millennials return to urban areas it may take some time for affordable housing to accommodate, but accommodate it will.

• Pew Research Center, “Millennials Overtake Baby Boomers As America’s Largest Generation,” April 25,2016
• Detroit Press