This is a problem I first encountered 4-5 years ago. I was in Florida visiting my Aunt & Uncle when they said that people are having a very hard time selling their units in their retirement community. I thought it was just the recession. Turns out it may be more of a generational issue.
Younger people don’t want big huge houses in the middle of a subdivision miles from the store. They are willing to compromise on space in order to walk to work or the store, have restaurants and nightlife nearby.
In may be the generation whose parents struggled to buy a house with land and good schools are finding that their kids would rather live closer to friends than face a long commute. Back when the cities were crime ridden and dangerous, no one wants to risk their family by moving in. Now the original benefit of close living are re-appearing: public transportation, entertainment, medical care, etc.
I predict that the suburbs will continue to decline but the secondary home market will improve as people look for weekend escapes. We shall see.