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🏙️ What will happen to our American cities?

Who’s staying in cities and who’s leaving them? And why?

Here’s what it looks like we’re seeing:

• Most major cities are recovering the population loss from COVID - thank you to the young single people!
  

• But there’s a general trend of families migrating from expensive, big cities to cheaper, smaller cities.
  

• All in all, most people still live in what are considered to be “urban areas”

But why are lots of young families pouring out of large cities?

Here’s my brief theory of what I think is going on:

1. After 2008, developers just stopped building homes, which is why you see the construction rate below COLLAPSE to near-record lows - stuff we hadn’t seen since the 1970s, when we had only ~65% of the current population!

2. As time went on, the economy got better and better, people got jobs again and made more money, and developers started building homes again. But we can all remember talks about rising housing costs, even in the mid-2010s before COVID
   

3. Then COVID hit in 2020, and people got lots of cash from the COVID stimmy bills (yay to Trump AND Biden passing stimulus bills). ALSO for the first time, tons of Americans got access to remote work
   

4. So with all this new cash and freedom to move wherever, lots of people (including young families) decided to move somewhere else, especially to cities in the “Sun Belt” (southwestern and southeastern states)
   

5. That’s why smaller, safer, cheaper cities, like Austin, TX, spiked in housing costs — because these people randomly showed up wanting to buy a home or rent an apartment

   • Thankfully costs in Austin are nosediving because of all the loosening regulations, making it easier to build more and different types of housing - yay!
     

6. Then, because of all the COVID supply chain issues (factories in Asia shut down) and everyone spending so much cash, inflation spiked for the first time in decades, so the Federal Reserve increased interest rates so people would spend less

So we ended up with a very weird storm for families with younger kids:

• They had fewer and more expensive housing options in most places because housing construction hadn’t bounced back from 2008

  • + more expensive to borrow for a mortgage because of the interest rates
    

• Crime spiked in most major cities and made them feel unsafe
  

• Public schools — we aren’t building and maintaining enough schools for kids, especially in the West Coast

• The TL;DR, as policy analyst Joey Politano describes:
  
  “don’t build housing → price out families —> don’t have the tax base to build new schools —> families move away for better schools —> rinse & repeat”

So what can we expect to happen?

Well, ~ 60% of Americans prefer living in communities with larger homes and having to drive several miles to restaurants, schools, etc. so this means the suburbs are winning the vibes (at least for nearly all Republicans, or older, whiter, less-educated people).

BUT, I think this trend of this young family exodus will at least slow down as we see -

• crime collapse in most cities

• cities convert empty office space to housing and other mixed-use things

• and more housing be built (if VP Kamala Harris wins, not Trump) 

The other good news is that VP Kamala Harris has officially made the Democratic platform about BUILDING to address the housing shortage (note how she didn’t say “housing crisis” at the DNC last night).

So there’s hope for our cities!

Still curious?

• The post from Derek Thompson’s tweet above in The Atlantic here

• Great longer post on the housing shortage from Kyla Scanlon here

Thanks for taking the Pack,

Zach

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Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.