Derek Thompson and Jordan Weissmann write for The Atlantic:
Needless to say, the Great Recession is responsible for some of the decline. But it’s highly possible that a perfect storm of economic and demographic factors—from high gas prices, to re-urbanization, to stagnating wages, to new technologies enabling a different kind of consumption—has fundamentally changed the game for Millennials. The largest generation in American history might never spend as lavishly as its parents did—nor on the same things. Since the end of World War II, new cars and suburban houses have powered the world’s largest economy and propelled our most impressive recoveries. Millennials may have lost interest in both.
I am of this generation, and I also don’t drive. I don’t want to, either. Like many people my age, I’d rather walk to my local market, even if it’s Safeway. It’s not just about what’s cool—it’s about what makes sense.
The most egregious example of the shift in values comes in the form of the big box “power centre“. The mayor of Calgary, Naheed Nenshi, is focused on the same urbanization efforts as Millennials embrace. Under previous mayors, retail developers were allowed to build several of these in our city. But the current administration recently rejected a proposal for another power centre (PDF mirror):
In talking about the rejection Monday, Mayor Naheed Nenshi called such car-focused shopping centres a “misguided experiment,” and said he hopes the rejection is a death knell for such developments. “I don’t think they’re particularly good retail spaces, and they’re certainly not good for the community, for traffic flow, (and) you can’t serve them easily by transit,” he told reporters. “I mean, look at Shawnessy, where you actually need two train stations to serve this vast retail area, instead of building around the site of a future train station.”
Car-focused living is out. Foot-, bicycle-, and transit-focused living is in. But while this makes for a more liveable, enjoyable community, there are economic worries. Thompson and Weissmann again:
In recent decades, the housing industry has usually led us out of recession. When the Federal Reserve lowered interest rates in the midst of the sharp recession of the early 1980s, for instance, a construction boom helped fuel the “Reagan Recovery.” With the housing market moribund, the Federal Reserve has lost a key means of influencing the economy with lower interest rates. The service-led recovery we’ve gotten instead is not nearly as robust.
Smaller houses built in dense, mixed-use neighborhoods generally take longer to build than McMansions on green-field sites. And of course, because they require fewer fixtures and furnishings, their construction spurs less economic activity.
There’s a necessary readjustment period. Recessions don’t end overnight, and these generational differences are going to have a lasting effect on the economy. Once economic factors and focus shifts smooth out, though, it has the potential to create a more sustainable, robust market.