The Morning Report
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Forbes magazine reports this week that the country’s in the middle of “the greatest population redistribution since the dust bowl.” And it’s all because Americans are leaving those metropolitan areas traditionally considered magnets or growth centers — like San Diego, Forbes says:
What’s causing the shift remains unclear. If jobs and strong local economies were the sole motivators, Los Angeles would not be hemorrhaging population at a faster rate than Detroit, and Chicago would not be losing people more quickly than Pittsburgh.
Could it be something as simple as housing affordability?
“A lot of economists are coming around to this point of view,” says (University of Illinois professor of architecture and urban planning Robert) Bruegmann. “I’m reluctant to attribute causality based on five years of significant data, but there is something to it … things are definitely out of the normal range.”
Wendell Cox, founder of Demographia Research, has a formula called the “median multiple” to determine housing affordability. The lower the number, the more affordable housing is in that market. Here’s how this story defined it:
It is the median home price divided by the median household income and represents how many years of pure untaxed, otherwise unspent salary it would take to buy a home in a given area.
In other words, it calculates the typical number of years’ worth of income it takes to buy a home in a particular area.
Historically, Forbes reports, the number has been below three nationwide. And even though they’ve seen surging population growth, the three fastest-growing metro areas have indexes below three — Atlanta, Dallas-Ft. Worth and Houston.
Cox said a decade ago, there was only one city above 4.5. Now, Los Angeles is higher than 11, and San Diego is higher than 10.
It makes sense that areas with higher regulatory costs and more restrictions on land use (like San Diego, or like Boston in the Forbes story) see higher housing prices than those in areas like Texas with little or no restriction.
But I thought this was particularly interesting:
The surprising thing, however, is that both the systems in Texas and places such as Massachusetts encourage low-density sprawl. Robert Puentes, who authored the study (for the Brookings Institution), says, “If you put up prohibitive local regulations and zone for low density, that is what you are going to get.”
In other words, in an effort to prevent sprawl by trying to clamp down on growth, growth will spread out as buyers head farther out of the city looking for more affordable homes.