On the back of recent population estimates from the U.S. Census Bureau [1], analyses appear to show a trend among Americans: They’re shifting out of the big cities—and the Rust Belt states—and are putting down roots in more suburban areas, namely those along the Sun Belt.
According to analyses by Trulia [2] Chief Economist Ralph McLaughlin, the metros with the fastest population growths—both over the year and for the last three decades—were highly concentrated in the Sun Belt. In fact, nine of the top 10 fastest growing cities were in Arizona, California, Colorado, Florida, Georgia, Nevada, North Carolina, South Carolina, and Texas. The only non-Sun Belt state to make the list was Washington.
The slowest population growth over the same periods was seen in the Rust Belt, where Connecticut, Illinois, Michigan, New York, Ohio, and Pennsylvania all saw drops. Non-Rust Belt states to make the list included California, Hawaii, and Louisiana. The largest decrease in population was in Detroit, which saw a 30-year population decrease of 19.3 percent.
According to analyses by FiveThirtyEight’s [3] Jed Kolko, the latest Census data also shows a big shift from urban areas to more suburban ones, with low-density suburbs growing by 1.3 percent in 2016 across the nation and more than 2 percent in the South and West. Kolko said this is “the fastest rate since 2008, when the housing bust put an end to rapid home building in these areas.”
Kolko said these findings show the so-called “urban revival” may not be as far-reaching as many hoped.
“That revival is real,” Kolko said, “but it has mostly been for rich, educated people in particular hyper urban neighborhoods rather than a broad-based return to city living. To be sure, college-educated millennials—at least those without school-age kids—took to the city, and better-paying jobs have shifted there, too. But other groups—older adults, families with kids in school, and people of all ages with lower incomes—either can’t afford or don’t want an urban address.”
Kolko’s analysis showed rural areas were hit the worst in population growth, with a .04 percent drop in 2016—the sixth year of decline for rural populations. Rural areas in the Northeast and Midwest saw the most significant drop, likely due to slow job and wage growth.
Ultimately, McLaughlin said population growth is directly tied to housing prices and demand, so suburban areas should expect a healthy market in the near future.
“It turns out 2015-2016 population change across the 100 largest U.S. metropolitan areas is highly correlated with house price growth across the same 100 metros,” McLaughlin said. “This is good news since population growth is a fundamental economic determinant of housing demand.”
And for those worried about another burst of the housing bubble? McLaughlin said not to fret.
“While there are undoubtedly other economic fundamentals that are also correlated with price growth, such as changes in income and land availability,” McLaughlin said, “the high correlation between population and house price growth does provide evidence that bubble-phobes need not worry that non-economic fundamentals are pushing prices higher.”