Brookings Institute notes population shift away from densely populated cities

Why the shift in migration from city to suburbs?

By Deborah Goonan, Independent American Communities

 

It’s official. The rush to move to crowded cities is over, and has been on the decline for the past seven years, according to Census data analyzed by the Brookings Institute.

William Frey, Senior Fellow of the Metropolitan Policy Program, says the data is clear: Americans are migrating toward the suburbs and smaller cities, and no longer flocking to a handful of coastal U.S. mega-metropolitan areas at the same rates as in the previous decade.

Instead, “interior” cities of more modest size are seeing moderate growth rates. Many of these gains are occurring in cities located in the northeast and midwest, not in just in sun belt cities that saw rapid growth prior to the recession that began in 2008.

Frey ties these population shifts to an improving economy, noting that when households have more income, they are more likely to migrate to less crowded places.

 

US population disperses to suburbs, exurbs, rural areas, and “middle of the country” metros

William H. Frey Monday, March 26, 2018

Newly released census data for the first seven years of this decade signal a resumption of the population dispersal that was put “on hold” for a good part of the post-Great Recession period. The Census Bureau’s annual county and metropolitan area estimates through 2017 reveal a revival of suburbanization and movement to rural areas along with Snow Belt-to-Sun Belt population shifts. In addition, the data show a new dispersal to large- and moderate-sized metro areas in the middle of the country—especially in the Northeast and Midwest. If these shifts continue, they could call into question the sharp clustering of the nation’s population—in large metropolitan areas and their cities—that characterized the first half of the 2010s.

Author

William H. Frey
Senior Fellow – Metropolitan Policy Program
Suburbanization picks up

The new numbers leave little doubt that suburbanization is on the rise, after a decided lull in the first part of the decade. Migration patterns and city-suburb shifts already hinted at this trend in the last year.

Read more:

www.brookings.edu/blog/the-avenue/2018/03/26/us-population-disperses-to-suburbs-exurbs-rural-areas-and-middle-of-the-country-metros/

None of this comes as a shock or surprise.

Additional Census data from the Survey of Construction (SOC) reveals trends in line with analysis of the Brookings Institute.

Consider the following facts:

From 1992 to 2016, the median price per square foot for all new detached single family homes sold increased by 83%, from $52 to $95. During the same period of time, median price per square foot for attached new homes (such as townhouses), doubled from $55 to $110. In other words, a smaller multifamily home with shared walls costs more to purchase, on a price per square foot basis, than a traditional single family home.

And the rate of increase in sale prices for attached homes has outpaced the rate of increase for detached homes. In 1992, the price per square foot of a new townhouse was 5.7% higher than a detached home. By 2016, a townhouse cost 15.7% more per square foot.

Source:

U.S. Census, Survey of Construction, Sold price per square foot

 

The inflated price per square foot could explain, in part, why attached housing, as a percentage of all new homes sold, has remained flat since 1992, at about 10-11% of sales.

U.S. Census, Survey of Construction, Homes sold by design type, metro area

 

Of course, attached homes are more common in densely populated urban areas. And new townhouses are more likely to require mandatory membership in a homeowners’ association (HOA). In 2016, 86% of attached new homes sold were located in common interest communities with an HOA, while only 72% of detached new homes came with the obligations of a mandatory HOA.

Source:

U.S. Census, Survey of Construction, Homes sold, by type of home, membership in HOA

In large cities such as New York, Miami, or Chicago, a home buyer is more likely to purchase a condominium or cooperative, mainly because there are few single family home options available.

Townhouses, condos, and co-ops require payment of assessments in addition to taxes and insurance. And HOA assessments have risen substantially between 2005 and 2015, by more than 32%. That’s more than twice the rise in home values over the same decade.

HOA assessments for detached homes are significantly lower.

Source:

Attack of the Killer HOA Fees (Trulia)

 

And, for home buyers searching for newer construction, but who prefer to avoid HOAs altogether, the northeast and midwest regions of the U.S. provide more options, especially in less densely populated suburban and rural areas.

In the midwest, as of 2016, 37% of new homes sold were not in an HOA. In the northeast 66% of new homes sold did not include a mandatory HOA. By contrast, in the southern and  western regions of the U.S., only one out of every four new homes comes without the HOA.

Another interesting observation is that buyers avoided an HOA in roughly 60% of new single family homes priced below $150,000; 43% of new homes priced between $150,000 – $200,000; and 32% of new homes with sale prices between $200,000 – $250,000.

The hard data contradict more than a decade of industry trade group claims that dense, association-governed, common interest housing, increases housing affordability.

Sources:

U.S. Census, Survey of Construction, Homes sold, by type of home, membership in HOA

Higher Density Development, Myth and Fact (ULI)

How and Why Community Associations Work (CAI)

 

Looking at the big picture, it appears that population migration patterns mirror the home buyer’s search for more affordable housing in less dense neighborhoods, as well as buyer preference for detached single family housing, preferably without the HOA.

 

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