Schaller Consulting

Boom Times or Doom Loop?
America's Urban Future, Post-Pandemic

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New York Daily News op-ed: The housing crisis’ economic toll: The damaging ripple impact from a lack of affordable homes

CityLab article by Patrick Sisson: The housing crisis’ economic toll: The damaging ripple impact from a lack of affordable homes

The Covid-19 pandemic was tremendously disruptive to American life and had profound effects on American cities and metropolitan areas. This report seeks to unpack the effects of the pandemic on urban America and place these effects on a much larger canvas that includes the urban revival of the last four decades and the advent of the knowledge-based economy as the key driver of metro area growth and prosperity. The overall question and focus of this report is what the pandemic together with this larger picture mean for the future of the American metropolis.

Pandemic effects:

• Just six of the 43 large and fast-growing metro areas examined in the report received a "boost" from the pandemic in population, domestic migration, jobs, and housing construction when comparing pre-pandemic and pandemic-era growth rates. These six are Austin, Dallas, San Antonio, Tampa, Jacksonville, and Indianapolis.
• Austin received the biggest boost, with 2.3 percent faster job growth, 4.1 percent faster growth of its housing stock, and slightly higher domestic in-migration during the pandemic than in years immediately before the pandemic.
• Outside these six, Sunbelt as well as Northern and coastal metros experienced reduced population and job growth during the pandemic while domestic in-migration and housing construction were for many barely above their pre-pandemic levels.
• Among the hardest-hit metros were San Francisco, Seattle, New York, Washington, Los Angeles, and Boston, the “super-star” metros of the 2010s. They are now, however, on the rebound. Over the last year their population losses slowed or reversed, they regained pre-pandemic job levels, and jobs rose faster than before the pandemic. Wage growth, however, has not regained pre-pandemic rates and is lagging that of growing Sunbelt metros.
• The pandemic-era run-up in housing prices was strongly related to economic factors, in particular job growth and increases in wages in tech and other knowledge-economy sectors. Austin once again stood out from other metros, with the strongest economic growth and by far the biggest increase in housing prices.
• Escalating housing prices in Sunbelt metros narrowed and sometimes erased the gap in housing costs between Sunbelt and expensive super-star metros. In 2022, housing prices were higher in six Sunbelt metros than Boston or Washington in both the suburbs and the urban core.

Growth in the metropolitan core:

• In the last decade, all but one of the 43 metro areas experienced population growth in the metropolitan core, and in all but five suburbs developed in the 1950s and 1960s population growth accelerated.

• Metro area economic output, productivity, and wages correlate most closely with the size and density of the downtown office district and close-in neighborhoods that have ready access to downtown jobs and urban amenities.
• Metros with the greatest size and density form a top tier in economic performance, their density dependent on extensive rail and bus systems which make possible population and job growth without the traffic congestion and parking demands that otherwise constrain urban densities.
• Correspondingly, they have the lowest proportion of downtown land devoted to surface lots.

• For decades housing shortfalls pushed growth out from the nation’s most successful urban centers. Expansion in the rural fringe served to constrain housing prices. But that has come at a substantial cost to the nation in innovation, productivity, and economic output.
• This report estimates that the additional GDP that would be generated from faster growth in the most housing-constrained metros (like New York and San Francisco) and greater downtown concentration of jobs and population in relatively decentralized metros (a group that includes all the Sunbelt metros), totals $1.22 trillion annually, or 12.2 percent of the GDP of the metros analyzed and 5.7 percent of the economic output of the nation as a whole.

• Between 2012 and 2022, Austin moved from twentieth to ninth in ranking of metro area economic output, productivity and wages.
• Other big gainers were Portland. Raleigh, and Salt Lake City, rising centers of tech and other knowledge-economy jobs, and Miami, on the strength of its position as a gateway for trade and commerce with Latin America and the Caribbean.

The central task in coping with these pressures is to make more intensive use of land in and near the metropolitan center. The all-but existential need is in housing, where pandemic-era housing appreciation put more and more housing out of the reach of everyday households. Beyond housing there is a vital need to expand transportation systems essential to accommodate growth, and to enlarge and enrich the public realm.

These are the essential ingredients to a future in which the nation’s largest cities and metro areas best utilize their unique strengths of density, diversity, economic sophistication and interconnectedness for their own benefit and the benefit of the country as a whole.

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