Why Americans Are Leaving Downtowns in Droves
The rise of remote work has snipped the tether between home and office, allowing many white-collar workers to move out of high-cost cities.
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Pop quiz: What do the metros of New York City, Los Angeles, Chicago, Miami, Boston, Seattle, San Francisco, San Diego, Minneapolis–St. Paul, Philadelphia, and Washington, D.C., have in common?
They are all among the 20 largest metropolitan areas in the country. All of their populations were growing in 2011. And then, in 2021, they all shrank by a combined 900,000 people, according to an analysis of census data by the Brookings scholar William Frey. That’s an urban exodus nearly the size of two Wyomings.
The great metro shrinkage is part of a larger demographic story. Last year, the U.S. growth rate fell to a record low. The major drivers of population—migration and births—declined, while deaths soared in the pandemic. But America’s largest cities are getting the worst of this national trend. In the past three years, the net number of moves out of Manhattan has increased tenfold. In every urban county within the metros of New York City, Los Angeles, and San Francisco, immigration declined by at least 50 percent from 2018 to 2021. In downtown Detroit and Long Island, deaths actually exceeded births last year.
The great metro shrinkage also appears to be part of a broader cultural story: The rise of remote work has snipped the tether between home and office, allowing many white-collar workers to move out of high-cost cities. Nearly 5 million Americans have moved since 2020 because of remote-work opportunities, according to Adam Ozimek, the chief economist for the Economic Innovation Group, a think tank in Washington, D.C.
Historically, shrinking cities and towns have major economic and cultural problems. But something pretty strange is happening in America’s biggest metros: Their housing markets aren’t suffering the way you’d expect. In fact, rents and housing prices are going up in almost all of these metros. In the past year, rents rose 33 percent in New York City, 16 percent in Los Angeles, and 12 percent in Chicago. Since the pandemic, rents are up in every city on the above list, except for San Francisco.
So what we have here is a bit of an urban mystery. If America’s biggest metros are shrinking, why are their housing markets on fire? And if rents are rising in almost all of these cities, how can they possibly be shrinking?
There are a few possible answers. One is that the census data are just wrong. For example, the government may have failed to count families that have been moving around during COVID waves, taking extended breaks from their city apartments without actually abandoning them. Or maybe the census took an accurate snapshot of city-population levels in 2021 but hasn’t yet caught up to people surging back into America’s biggest cities in the past few months, creating yet another great urban renewal. In these scenarios, many places that looked imperiled during the data-collection process are actually crowded and booming right now.
A second possibility is that my somewhat-dystopian prediction from 2019 is coming true: America’s densest cities are becoming playgrounds for the rich and mostly childless. In 2001, L.A. County recorded 153,000 live births. In 2021, it recorded fewer than 100,000 births. Perhaps middle-class workers and families with young kids used the pandemic as an opportunity to accelerate their move to the suburbs or cheaper towns. As poorer and younger families left, richer and older people stayed, and some affluent young people moved in. In this scenario, some cities might have gotten richer even as they got smaller, pushing up rents and home prices.
The third, simpler answer is: It’s inflation, stupid. That is, cities really are struggling with population loss, but urban rents and housing values are rising along with national inflation, which is surging toward 10 percent.
This seems like a potent explanation. The Stanford economist Nick Bloom has pointed out that in a reversal of history, big cities such as New York and San Francisco, which saw the fastest rent growth from 1980 to 2019, are now seeing some of the slowest rent growth in the country. With inflation at a 40-year high, many cities are experiencing rent growth that is both very high and also significantly slower than the national average.
What all of this means is that America’s superstar cities might be in a little more trouble than we think—even if that trouble is currently obscured by high inflation. According to Ozimek’s research, the share of Americans who say that they are planning on moving because of remote work has increased by 50 percent since October 2020, to more than 9 percent of the country. If true, that means that about 19 million people, or the population of New York State, are strongly thinking about moving because of the freedom afforded by remote work. Cities with a high cost of living and white-collar jobs that can be done remotely—such as San Francisco—are the most likely to see more out-migration in the next few years, especially as Sun Belt metros continue to add more houses than coastal cities.
Bold predictions of urban death have rarely come true. But urban death and urban struggle are not the same. “I think arguing against urban struggle by pointing to centuries of a general trend towards urbanism is smoothing over some pretty bad times for cities,” Ozimek told me. “The 1970s happened.”
So what might this period of urban struggle look like? Just check out what’s happening now. Mass-transit ridership has collapsed from its pre-pandemic highs in New York, Boston, the Bay Area, and Washington, D.C. Although restaurant bookings and travel have bounced back almost entirely, office occupancy remains 50 percent below its 2019 levels. In San Francisco, vacant office space has nearly quadrupled since the pandemic to 18.7 million square feet. In New York, Mayor Eric Adams has practically begged white-collar workers to return to Midtown, even as those workers patronize businesses in more residential parts of the city, closer to where they live. America’s downtown areas support millions of jobs that can’t be made remote—in retail, construction, health care, and beyond. But for millions of white-collar workers, something important has changed: They don’t work “in” cities anymore. They work on the internet. The city is just where they go for fun.
With rising prices and shrinking populations, with emptier downtowns and bustling residential neighborhoods, with booming leisure and busted offices, the near future of America’s richest cities could be pretty weird.