The thing I don’t like about articles like this is we try to come to some sweeping conclusion about what cities are doing things right, what cities are doing things wrong, and then we look at the winners and say that more cities should try to be like that and vice versa. In any case, here’s the Upshot article I object to.
Objection #1 — it ignores the change in the homeownership rate for the affected groups: Here are the age 25-29 and 30-34 homeownership rates for 2000 and 2012:
We’ve seen a huge drop in age 30-34 homeownership, so all else equal, cities that attract age 30-34 homeowners have lost out to cities that attract age 30-34 renters. While the current group of age 30-34’ers has been set back by the recession, I think it’s temporary, even if “temporary” lasts for many years.
Objection #2 — it ignores the change in the level of residential investment since 2000: This is similar to #1 above. Fixed residential investment as a percentage of GDP fell by about a third from 2000 to 2012.
That’s huge. All else equal, cities more reliant on construction have lost out to cities that don’t.
Objection #3 — There’s an unexplored racial component at work:
Here’s the table:
Looking at the list, Houston’s a special case because of the growth in the energy industry since 2000, but excluding Houston you can’t help but notice that the winners (Denver, Austin, Portland) have a fairly low share of African-American citizens while the losers (Atlanta, Cleveland, Detroit) have a fairly high share. I suspect this is because non-whites were hammered by the Great Recession more than whites — they took the brunt of the subprime/unemployment blow, and their access to credit remains much more restricted post-crisis than white access.
One final thought on this related to Atlanta because I’m always thinking about why Atlanta appears wherever it does on lists. Here’s Atlanta’s unemployment rate in 2000 and 2012:
Atlanta had a 3% — THREE PERCENT — unemployment rate in 2000, as it had one of the hottest economies in the country at the time. Then the financial crisis happened. Housing construction plummeted. Homeownership plummeted. Black households, of which we have a lot, were decimated financially. As a result, at the end of 2012 our unemployment rate was still at 8.5%, higher than the national average.
Over the next 10 years, homeownership and residential investment will recover, as will the financial fortunes of African-American households. Big Tech will run out of space in Silicon Valley and be forced to outsource jobs to cheaper metro areas. Millennial priorities will shift from living in the most dense neighborhood possible with the best bars to caring about schools and adequate square footage for their families.
Let’s not come to short-sighted policy recommendations based on an apples to oranges 12-year change.