Urban Living Becomes a Luxury Good

By Justin Fox

After World War II, the economic center of gravity in the U.S. began shifting from the cities to the suburbs -- and that shift continued for more than a half-century. In the past few years, though, there’s been lots of talk about the trend reversing.

What does the evidence show? Well, it can be a little confusing.

Here, for example, is the result of City Observatory’s latest crunching of data (just out this morning) on job growth within and outside of U.S. downtowns:



The last time the Portland, Oregon, urban-policy think tank crunched these numbers, with data through 2011, it looked as if they might signal a really big shift. As you can see in the above chart, job growth in city centers substantially trailed growth in the periphery during the last economic expansion (and presumably for decades before then). During and after the 2007-2009 recession, though, city centers added jobs at a faster pace than suburbs -- although growth was pretty slow in both.

Since 2011, overall growth has been strong and the periphery has regained its lead. Only barely, though. Something has changed in the urban-suburban relationship, but the suburbs sure aren’t going away.

Two recent studies give a sense of the dynamics at work. In November, Economists Lena Edlund, Cecilia Machado and Maria Micaela Sviatschi found that the relationship between housing prices and distance from the city center had flipped between 1980 and 2010: In 1980 housing generally was more expensive farther from downtown; by 2000 it was more expensive closer in. In March, real estate economist Jed Kolko reported that the share of Americans living in suburban neighborhoods has continued to grow.

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http://www.bloomberg.com/view/articles/2016-05-24/urban-living-becomes-a-luxury-good