Suburban slums -- city centers being revitalized

Now with lender requirements becoming stiffer and less capital available in general, it is harder to finance homes in areas where prices are less stable. In some communities where the amenities are less, and jobs are less, but the home prices have been affordable, people of lesser means have aggregated over time. This has lead to poorer care of the properties, more absentee landlords, and more gangs and crime. These are qualities long attributed to older urban areas. Now these areas are on the mend.

There has been a renaissance in many cities and property values have gone up much more rapidly than in the suburbs and been more stable during the recent downturn in housing prices. All indications are that this condition will continue for a while.

Developers feel much safer investing within urban centers doing infill projects knowing what they produce will be somewhat limited in supply, rather than building outside of town where a competitor can build on the next parcel, and the next, until supply and demand are out of balance. This too is to blame for the current situation and also leads right back to the abundance of cheap capital and ridiculous lending standards.

As an architect, investor, and sometimes developer I see this trend first hand, and I expect it to continue for a generation to come, at least. The one exception is those areas where enough of a nucleus has been established that the suburban area has at least become a satellite or a node (read -- 'mini city') allowing for a distinct community with jobs and a solid tax base.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.