Theory: The 1990s would see leading-edge baby boomers begin to flock back to cities as they reached their later 40s and 50s and their children flew off from the proverbial nest. Fact: A boomer–led revival of downtowns remains only a theory.

Facts are stubborn things. The number of people born between the years 1945 and 1954—our leading-edge boomer cohort—who live “downtown” (within 2 miles of a central business district) in the nation's 91 largest metro regions increased in exactly one city during the 1990s: Sarasota, Fla. In the 2-to-5-mile ring surrounding downtowns, the few places that gained boomers were Las Vegas; McAllen, Texas; Stockton, Calif.; Scranton, Pa.; and West Palm Beach and Fort Lauderdale, Fla. Still, population evidence shows this was less a result of boomer magnetism than of rapid overall growth.

With few exceptions, baby boomers continued to exit the nation's downtowns and nearby areas during the past decade. Sure, lots of boomers moved back to cities. But more of them headed out. And net gains were rare.

Technically speaking, the rate at which baby boomers left certain metro areas during the ‘90s was slower than the pace of exodus set by the previous generation as it reached the same age bracket during the ‘80s. This propped up demand in the ‘90s in Ann Arbor, Mich.; Atlanta; Austin, Dallas, Houston, Fort Worth, and San Antonio, Texas; Los Angeles; Miami, Tampa, and West Palm Beach, Fla.; Phoenix; Richmond, Va.; Scranton; and Washington, D.C. But nowhere was the increase significant.

BOOMING WITHOUT BOOMERS Amazingly, downtowns are vibrant. Population increased in 38 downtowns among the largest metro areas in the ‘90s, and 18 grew more than 5 percent. Meanwhile, the population in the 2-to-5-mile ring increased in 49 metros. A hefty 17 in this group gained 10 percent or more.

Accounting for the phenomenon is a combination of the baby-bust generation born from 1965 to 1974—and immigrants of the same Gen X. Looking ahead, the leading edge of echo boomers, now in their 20s, should sustain the momentum. That's good news for those betting demand for condos and downtown living will remain robust.

FILLING THE NICHE In many metro areas over the past 15 years, net population gains combined with a need for new buildings to replace rundown ones, catalyzing infill building. For big builders, though, infill is an approach-with-caution market. It is a niche both because it amounts to only a fraction of overall new construction each year and because it is an even smaller fraction of the total housing stock in built-up urban core areas.

Even in places where the ranks of boomers shrink, they can still act as a substantial piece of this relatively small market. That's because boomers who are interested in living in and around downtown often have the higher incomes required to rent or buy new, unsubsidized downtown housing.

Sizing up infill markets, therefore, means doing precise market research to choose the right city, and target products to customers accurately. Today, even the leaders of the big builder infill pack derive only a small share of their profits from it. But they report that infill housing has better margins than single-family production in large subdivisions.

If the infill market doesn't become overcrowded, there will be money to be made both in downtowns roaring back with population gains and in those with strong demand for replacement housing. Even if baby boomers fail to materialize as the key market driver in the years ahead, the behavior of the baby-bust generation, the entrance of the echo boomers into household-forming ages, the obsolescence of an older urban stock, and the prospects of some second-home buying in the premier downtowns will expand the infill market.

Learn more about markets featured in this article: Los Angeles, CA.