To your point about the superstar cities driving people away despite income premiums, there’s a genuine difference between these scenarios:
1. Person feels priced out of Manhattan, moves to Phoenix for better affordability despite a relative pay cut.
2. Person feels priced out of Manhattan, moves to Buffalo to stay in region, helps drive slowly increasing unaffordability in Buffalo.
3. Person feels priced out of Manhattan and doesn’t want to live more than 3 hours away, moves out past Easton, PA (IE deepest western outskirts of NYC). Houses are dirt cheap because it’s bumblefuck Pennsylvania.
4. Person feels priced out of Manhattan, moves to deep LI or CT suburbs outside of census tract but well within 3 hours; houses are barely affordable with a stretch on two incomes, but vastly more spacious than the city.
5. Person feels priced out of Manhattan, moves to nearby suburbs mostly within greater NYC census tract. Is paying only one arm/leg for twice the space as Manhattan, but it’s still brutal and preventing saving for homeownership.
6. Person feels priced out of Manhattan, stays in Manhattan.
For the record, I’m roughly a 5.
But as we look at income relative to the superstar city… in 3-6, it’s entirely possible to hold the same job and income from Manhattan, while only 5-6 get counted as “living in the superstar city”! And although pre-2020, 1 was a BIG stretch to hold down a Manhattan job, 1-2 are not nearly as much of a stretch anymore in the post-2020 remote work era (and yes, I already know that trend was overblown, I’m only factoring in the properly-blown part here).
Moreover, that’s JUST for Manhattan jobs! There’s still more difference between someone moving from Manhattan to a farm out past Easton PA for cheaper housing, and someone who grew up down the road from that farm, runs his granddad’s mechanic shop, and is struggling against all the rich city folk bidding up housing in the area.
All of that is to say, I’m not sure we’re getting the full picture on flight from the superstar cities. I would like to know what the mix of flight was in terms of (1) distance of flight from the city, (2) relative cost-to-income differential incurred, and (3) absolute cost and income differentials.
Because it almost certainly IS a “mix”of 1-6, even more categories. But I’d like to know whether it’s (in descending order) “60/30/3/2/2/2/1”, “5/20/25/25/20/2”, “1/2/2/2/3/30/60”, or whatever else.
Just speculating, if it’s heavily loaded towards Phoenix, then we know “available-room-to-sprawl” was probably dominant, mortgage access not so much, and income wasn’t decisive for most fleers. If it’s a relatively even mix among 1-6, then all factors are most likely. And if most people were just fleeing to within long commute distance, then we credit lack of mortgage access for forcing people to buy up existing sprawl to maintain their incomes.
That's a great point. I've met people in Phoenix, even before Covid, that "commuted" to San Francisco. They would fly in for a couple days a week.
Looking at jobs per resident, it does look like that number is rising in New York City, so I think you're right that, recently, population changes may overstate the trend in jobs. But, both LA & NYC still appear to have a downward trend in jobs as a % of the US total.
Yeah, IMO there are multiple overlapping trends that we’re getting in the data, which is why it shows up so differently from so many different perspectives.
- Blue states losing population overall due to stagnant/anti-abundance governance.
- Blue cities in all states pushing population outside their census tracts for same reason.
- Blue cities in red states benefiting from relatively light regulation.
- Recently, red states regulatorily attacking their cities as part of the culture war.
- Rural population still getting brain-drained to now-expanded superstar city catchment areas due to income premium.
- Metros reached their suburban sprawl limits in late 90’s/early 00’s.**
** My latest thinking is that this is specifically about how suburbanization happened and to what extent it was substituted for urbanization. LA was much smaller before the postwar suburban explosion, and still remains at 1/3 of NYC’s pop density despite having nearly as large an absolute population, and covering many times more land area.
LA showed what happens when you suburbanize faster than anyone else; they hit their physical limits long before the agglomeration impacts (long commutes, etc) made themselves felt.
NYC was already so large that the city continued to densify and attract agglomeration until it couldn’t keep it all in, like an overfilled backyard pool. A much larger area than LA continued to suburbanize and exurbanize under the strain.
SF on the other hand was denser than LA, and had to sprawl sooner, but didn’t start getting affordability/sprawl pressure until the information revolution. By that time, they’d already outlawed most sprawl and density, so it just turned into the hellhole it already was.
Your own fav example, Kalamazoo, wasn’t anywhere as big to begin with, never had a big reason to explosively sprawl (like, say, LA), and thus still has some room left before it reaches LA’s level of unworkability.
My own STL, though, sprawled early even as demand was dying out due to net population stagnation (the stats always confuse analysts because they look at numbers for the city proper instead of the metro, which didn’t decline like the city but indeed has recently slowed down). Thus, unlike Kalamazoo, STL had reached its sprawl limit before the mortgage crackdown despite both being hollowed out.
Atlanta is somewhere in between LA and STL. Miami kinda did a mini-NYC thing. Houston didn’t have LA’s or SF’s physical nor legal limits.
I think we can tell similarly highly varying stories about basically every city! Which is why I’m always arguing that we can’t use any one city as a perfect example of “see, here’s what happened and this is the ONLY thing that happened period!”. It’s just not true!
And yet, neither can we exactly map the national trends onto every single city, nor use any one city as disproof of them.
That is all interesting, but the mortgage crackdown in 2008 did create measurably shared outcomes among all cities that are of a larger scale than the complicated issues that make all cities different. I think it's more important to account for that than it is to account for all the complications. I hope we can get back to a housing market where the reverberations from the mortgage crackdown are small enough that the complicated stuff is more important again.
My position is that because of the 2nd and 3rd order mechanisms of the complications and their interaction with the crackdown, I suspect that you are overinterpreting the totality of crackdown impacts as 1st-order.
I suspect that although the first order may be quite large nationally — thus leading you to your conclusion — it is being very frequently outweighed locally by the higher orders and other causes, and making up its national numbers in places like LA (just on size) or the rurals (from basic poverty leading people to not qualify).
I think it would be pretty amazing if an immediate and permanent evaporation of 2/3 of the new single family construction market in every single city across the Midwest was caused by a complicated mixture of local idiosyncratic factors.
But, I do think there are downstream effects. The 2nd order effect led to 30% rent inflation. The 3rd order effect is that new large scale builders are FINALLY able to step in to replace homeowners as sources of new homes. The 4th order effect will be that rents will finally moderate. The 5th order effect will be that those new suppliers will be outlawed. The 6th order effect will be that rent inflation will return, as there will be no legal form of new housing remaining.
Recognizing the centrality of the mortgage crackdown is the only way to stop the 6th step. And wherever the new home suppliers are banned, they will be banned because of idiosyncratic local factors that make those rental homes and their dastardly owners a bad fit for the local character.
To your point about the superstar cities driving people away despite income premiums, there’s a genuine difference between these scenarios:
1. Person feels priced out of Manhattan, moves to Phoenix for better affordability despite a relative pay cut.
2. Person feels priced out of Manhattan, moves to Buffalo to stay in region, helps drive slowly increasing unaffordability in Buffalo.
3. Person feels priced out of Manhattan and doesn’t want to live more than 3 hours away, moves out past Easton, PA (IE deepest western outskirts of NYC). Houses are dirt cheap because it’s bumblefuck Pennsylvania.
4. Person feels priced out of Manhattan, moves to deep LI or CT suburbs outside of census tract but well within 3 hours; houses are barely affordable with a stretch on two incomes, but vastly more spacious than the city.
5. Person feels priced out of Manhattan, moves to nearby suburbs mostly within greater NYC census tract. Is paying only one arm/leg for twice the space as Manhattan, but it’s still brutal and preventing saving for homeownership.
6. Person feels priced out of Manhattan, stays in Manhattan.
For the record, I’m roughly a 5.
But as we look at income relative to the superstar city… in 3-6, it’s entirely possible to hold the same job and income from Manhattan, while only 5-6 get counted as “living in the superstar city”! And although pre-2020, 1 was a BIG stretch to hold down a Manhattan job, 1-2 are not nearly as much of a stretch anymore in the post-2020 remote work era (and yes, I already know that trend was overblown, I’m only factoring in the properly-blown part here).
Moreover, that’s JUST for Manhattan jobs! There’s still more difference between someone moving from Manhattan to a farm out past Easton PA for cheaper housing, and someone who grew up down the road from that farm, runs his granddad’s mechanic shop, and is struggling against all the rich city folk bidding up housing in the area.
All of that is to say, I’m not sure we’re getting the full picture on flight from the superstar cities. I would like to know what the mix of flight was in terms of (1) distance of flight from the city, (2) relative cost-to-income differential incurred, and (3) absolute cost and income differentials.
Because it almost certainly IS a “mix”of 1-6, even more categories. But I’d like to know whether it’s (in descending order) “60/30/3/2/2/2/1”, “5/20/25/25/20/2”, “1/2/2/2/3/30/60”, or whatever else.
Just speculating, if it’s heavily loaded towards Phoenix, then we know “available-room-to-sprawl” was probably dominant, mortgage access not so much, and income wasn’t decisive for most fleers. If it’s a relatively even mix among 1-6, then all factors are most likely. And if most people were just fleeing to within long commute distance, then we credit lack of mortgage access for forcing people to buy up existing sprawl to maintain their incomes.
That's a great point. I've met people in Phoenix, even before Covid, that "commuted" to San Francisco. They would fly in for a couple days a week.
Looking at jobs per resident, it does look like that number is rising in New York City, so I think you're right that, recently, population changes may overstate the trend in jobs. But, both LA & NYC still appear to have a downward trend in jobs as a % of the US total.
https://fred.stlouisfed.org/graph/?g=1KVPg
Yeah, IMO there are multiple overlapping trends that we’re getting in the data, which is why it shows up so differently from so many different perspectives.
- Blue states losing population overall due to stagnant/anti-abundance governance.
- Blue cities in all states pushing population outside their census tracts for same reason.
- Blue cities in red states benefiting from relatively light regulation.
- Recently, red states regulatorily attacking their cities as part of the culture war.
- Rural population still getting brain-drained to now-expanded superstar city catchment areas due to income premium.
- Metros reached their suburban sprawl limits in late 90’s/early 00’s.**
** My latest thinking is that this is specifically about how suburbanization happened and to what extent it was substituted for urbanization. LA was much smaller before the postwar suburban explosion, and still remains at 1/3 of NYC’s pop density despite having nearly as large an absolute population, and covering many times more land area.
LA showed what happens when you suburbanize faster than anyone else; they hit their physical limits long before the agglomeration impacts (long commutes, etc) made themselves felt.
NYC was already so large that the city continued to densify and attract agglomeration until it couldn’t keep it all in, like an overfilled backyard pool. A much larger area than LA continued to suburbanize and exurbanize under the strain.
SF on the other hand was denser than LA, and had to sprawl sooner, but didn’t start getting affordability/sprawl pressure until the information revolution. By that time, they’d already outlawed most sprawl and density, so it just turned into the hellhole it already was.
Your own fav example, Kalamazoo, wasn’t anywhere as big to begin with, never had a big reason to explosively sprawl (like, say, LA), and thus still has some room left before it reaches LA’s level of unworkability.
My own STL, though, sprawled early even as demand was dying out due to net population stagnation (the stats always confuse analysts because they look at numbers for the city proper instead of the metro, which didn’t decline like the city but indeed has recently slowed down). Thus, unlike Kalamazoo, STL had reached its sprawl limit before the mortgage crackdown despite both being hollowed out.
Atlanta is somewhere in between LA and STL. Miami kinda did a mini-NYC thing. Houston didn’t have LA’s or SF’s physical nor legal limits.
I think we can tell similarly highly varying stories about basically every city! Which is why I’m always arguing that we can’t use any one city as a perfect example of “see, here’s what happened and this is the ONLY thing that happened period!”. It’s just not true!
And yet, neither can we exactly map the national trends onto every single city, nor use any one city as disproof of them.
That is all interesting, but the mortgage crackdown in 2008 did create measurably shared outcomes among all cities that are of a larger scale than the complicated issues that make all cities different. I think it's more important to account for that than it is to account for all the complications. I hope we can get back to a housing market where the reverberations from the mortgage crackdown are small enough that the complicated stuff is more important again.
My position is that because of the 2nd and 3rd order mechanisms of the complications and their interaction with the crackdown, I suspect that you are overinterpreting the totality of crackdown impacts as 1st-order.
I suspect that although the first order may be quite large nationally — thus leading you to your conclusion — it is being very frequently outweighed locally by the higher orders and other causes, and making up its national numbers in places like LA (just on size) or the rurals (from basic poverty leading people to not qualify).
I think it would be pretty amazing if an immediate and permanent evaporation of 2/3 of the new single family construction market in every single city across the Midwest was caused by a complicated mixture of local idiosyncratic factors.
But, I do think there are downstream effects. The 2nd order effect led to 30% rent inflation. The 3rd order effect is that new large scale builders are FINALLY able to step in to replace homeowners as sources of new homes. The 4th order effect will be that rents will finally moderate. The 5th order effect will be that those new suppliers will be outlawed. The 6th order effect will be that rent inflation will return, as there will be no legal form of new housing remaining.
Recognizing the centrality of the mortgage crackdown is the only way to stop the 6th step. And wherever the new home suppliers are banned, they will be banned because of idiosyncratic local factors that make those rental homes and their dastardly owners a bad fit for the local character.
https://fred.stlouisfed.org/graph/?g=1KW06