It is kind of an urban myth, if you’ll pardon the pun: there is a story afoot that people are leaving the suburbs and moving back to the cities. I’ve written about the trend myself, but honestly perhaps the best evidence that it is true are the endless condos that are sprouting up it seems in every North American city. If they keep building, it must be that people are moving in, right? Well, the statistics have been quite mixed on that – until this latest report from the U.S. Census Bureau.
According to Census data for the period from 2010 to 2013, population growth in the 381 metro areas in the U.S. has been shifting from the suburbs to the ‘core counties’. Growth in the suburbs accounted for about a third of the growth in metropolitan areas over those years, as compared to over 80 percent in the previous five years. As USA Today puts it, basically ‘the USA’s urban core is getting denser, while far-flung suburbs watch their growth decline’.
So what’s behind the trend? Because it is an important trend, and an important shift. Really, for the past fifty years or so, people have been leaving the cities and heading for the suburbs. If the direction is changing, that’s a big deal.
Well, I’d say demographics are part of it: those big city condos suit retiring boomers, and also suit the twentysomethings (the latter of which have been growing in numbers over the past few years) so there is some natural growth that comes from that. The bigger reason, however, I would say, however, has been aftermath of the recession and more specifically the crash of the housing market. After all, there may be more twentysomethings, but they have jobs that do not pay enough, and a ton of debt. So coming up with a big downpayment and arranging mortgage financing would be a challenge, at best.
More important – in my view – is that those Millenials (basically those young adults who came of age starting arudn 2000) are not that enamored of home buying anyway. Oh sure, they might buy eventually, but they are not so desperate to do so that they will settle for living in an exurb a couple of hours away from the city center.
You can see more evidence that the U.S. housing collapse has dealt a blow to the surburbs if you compare the U.S. and Canadian figures. When the last Canadian census was done – in 2011 – the results showed that over the prior five year period, the suburbs were where most of the metropolitan growth had happened, not the areas closer to the downtowns And no wonder. Canada never had a housing collapse, and even the recession was relatively mild compared to the U.S. and many other countries.
So as to what happens next – in the U.S. and in Canada – the answer really depends on the way that the housing markets evolve. In the U.S., there has been a steady recovery in suburban housing prices over the past year, and some fragile confidence that it might continue. If it goes on long enough, the next wave of new home buyers may not remember the bursting of the last bubble, and migration patterns may shift again. If they do, that’s great news for those boomers looking for someone to buy their really-too-big suburban shacks in a few years. If not – well, they had better hope that their stock market holdings perform better than their real estate ones.