Big City Populations Survive the Housing Crunch

William H. Frey

America’s big cities, often considered to be the most demographically challenged part of our landscape, turn out to be survivors of the nation’s recent housing doldrums.

New Census Bureau numbers for the 12 months ending July 2008, when the mortgage meltdown began to show its full effect, make plain that big cities on the coasts and in large stretches of the Heartland registered upticks in their growth at the same time that many suburbs, exurbs and smaller metropolitan areas saw the bottom drop out of their mid-decade growth. In fact, within the nation’s largest metro areas, rising central city growth rates are approaching the declining rates of their suburbs. (Figure 1) In some areas, such as Washington D.C. and Atlanta, central city growth has surpassed suburban growth. (Figures 2 and 3)

The 2008 population figures underscore the resiliency of large urban centers that are economically and demographically diverse. This is certainly the case with the nation’s three largest cities—New York, Los Angeles, and Chicago—cities which certainly weathered their ups and downs over the last several decades. (Figure 4). Yet Chicago now registers its highest growth rate this decade, New York continues the surge it showed last year, and Los Angeles exhibits its highest growth since 2002. As a group, all cities with populations exceeding one million people are growing at a faster pace than at any time this decade. (Figure 5)

Some of this resurgence of big cities is due to inherent strengths, such as broad economic diversity at a time when smaller cities and one-industry towns are vulnerable to economic shocks. Some is also due to a “windfall” of retaining and attracting residents who are no longer moving to the suburbs, as speculative mortgage lending dried up and immigrants returned to networks in established city communities.

Yet these gains are not confined to the very largest American cites. Among the 75 cities with populations exceeding 200,000, 41 grew faster in 2007–08 than in the preceding year, and 54 grew faster than in 2004–05, a peak year for the housing bubble. Only 11 lost population, compared with 22 in 2004–05 (Table 1). Pacific coast cities showed substantial rebounds last year: San Diego, San Jose, Oakland, Portland and Seattle each exhibited its fastest growth rate this decade, just as San Francisco continued its growth turnaround from the earlier dot-com bust, and Los Angeles rebounded from a mid-decade slump. All of these cities retained some of their populations due to slowed migration to interior California and surrounding western states. Most also benefitted from immigrants migrating back to established communities.

Growth upticks also appeared in large Midwestern cities that are less steeped in manufacturing, especially auto production. Among these are Minneapolis, St. Paul, Columbus, Indianapolis, and Omaha. Even a few older industrial cities like Pittsburgh, Buffalo, and Philadelphia exhibited noticeably slower declines. Detroit and St. Louis, on the other hand, saw their population losses accelerate.

Some Southern cities that were less exposed to the mortgage meltdown, such as Raleigh, Charlotte, Fort Worth, and Austin, showed surprisingly high, though sometimes decreasing, growth rates. Atlanta also managed to continue its recent gains, even as its outer suburbs were wracked by foreclosures.

Of course, those cities which were located at ground zero of the housing free fall did not fare so well. Las Vegas’ growth rate plummeted to just 0.4 percent, down from rates as high as 2 to 3 percent earlier in the decade. Similarly, Orlando saw its growth decline to 0.8 percent from a high of nearly 4 percent in 2005–06. Yet these big-city growth meltdowns were relatively rare. Even Phoenix, which bore the brunt of much of the bursting housing bubble, showed a small growth revival in 2007–08, while growth in its suburban city of Glendale continued to plummet.

If there is a silver lining to the bursting bubble of mid-decade housing and suburban growth, it is the proof that large diverse core cities were able to survive. Of course, these population figures pre-date the worst effects of the current recession, which materialized in late 2008 and early 2009. It remains to be seen how rising unemployment will impact growth in these cities and their suburbs, and how they will respond when the housing market eventually recovers.