Housing & Mortgage
That Urban Exodus We’re Hearing About? Not So Much
People are moving around, like they always do
Allow me to pour cold water on a rumored social phenomenon: No, people are not abandoning cities in droves because of the pandemic. The much-heralded 2020 urban exodus is not a thing.
You may have read numerous newspaper articles declaring an exodus. The Aug. 30, 2020, New York Times story “New Yorkers are Fleeing to the Suburbs: ‘Demand is insane,’” made the case better than most; one New Jersey home had 97 showings and sold for 21% over its asking price, while home sales in Long Island, Westchester County and Connecticut suburbs as much as doubled year over year.
Not an exodus. An exodus is the quarter million or so people who fled New Orleans after it was swamped by Katrina, many never to return. We have a busy real estate market. At any one time, a surprisingly small number of homes are for sale.
In the 500 square miles of Westchester County, roughly 1,450 homes sell per quarter; in the Hamptons, the number is lower, in the 330 to 500 range. New York City’s population is 8.3 million. This means that a mere 0.2% of the city’s residents heading to the suburbs would easily flood the surrounding housing markets.
Let’s do a math experiment: Imagine if 10% of the populations of Los Angeles, New York and San Francisco decamped elsewhere. That’s 1.3 million people. Twenty-nine U.S. states have housing shortages at the moment, according to Freddie Mac, some of them severe, and the surrounding states would simply not be able to accommodate 1.3 million new residents without major upheaval. The disruption would extend far beyond busy open houses.
No exodus means housing markets that, for the most part, continue to exhibit signs of shortages in the most popular cities. Sure, New York and San Francisco and Seattle are a bit cheaper than they otherwise would be. But don’t expect to trade your Cleveland four-bedroom for one in those cities. The most severe housing impact of the pandemic could be lower income families and individuals, out of work from the deep recession, evicted from apartments and homes they rent.
People move around a lot, pandemic or not. A recent survey by the think tank Centre for London found that 7% of Londoners plan to leave the city in the next year. This sounds shocking: 7% of 9 million residents is a lot! “That happens every year. It’s roughly the proportion that leave annually,” says Centre for London research manager Nico Bosetti.
Especially to non-New Yorkers, an exodus sounds reasonable, overdue even. Of course long-suffering New Yorkers want to leave smelly, sticky, overpriced Gotham. Some do. Every year. From 2011 to 2018, 23% of New Yorkers left the city altogether, according to a report from Baruch College. They were replaced by new arrivals.
California has long been undergoing supposed attrition. Recent headlines include “California is a failed state. How do we know? They’re moving to Arizona in droves,” and “People still leaving California for Texas despite Covid-19 surge.”
More than 39 million people live in California. This means that around 4 million Californians will move this year — in line with the 10% of Americans who move every year, a number that’s down from 14% to 15% just a few years ago, according to the Brookings Institute. Some will head to Texas and Arizona. This year, they’ll say that they are moving because of the pandemic or wildfires or politics. But their numbers may well be typical.
The Census surveys that provide definitive numbers will not be available until fall 2021. Actual exodus only happens when a substantial group leaves, and incoming domestic and international arrivals don’t replace them. Think Detroit’s multi-decade population leakage, from nearly 2 million down to about 700,000. California and New York City regularly welcome large numbers of international immigrants. This year those numbers will be smaller, but that is a temporary pandemic scenario, and not the narrative being discussed.
In reality, urbanites tend to stick around, especially those who are struggling. Relocation costs can be high, with transaction and moving costs eating up to 10% of a home’s value. The London survey found that 29% of Londoners are struggling to make ends meet, and approximately a third expect their financial scenarios to worsen. Yet 93% of Londoners plan to stick around. “Many have local roots and access to informal childcare or proximity to healthcare,” says Bosetti.
Roger Keil, a professor of environmental and urban change at York University in Toronto, is nonplussed by the exodus talk. Nothing is less exciting to those who study demographics than a few people moving. New York City, for example, has been mildly shrinking for a few years: While the population grew early in the decade, it has lost 403,700 residents overall between 2010 and 2019. That’s normal growth and attrition. Nothing newsy. Keil says. “It is a bit of fiction that most people can choose where they live, and it’s been overplayed by the media.”