More Americans Are Leaving Cities, But Don’t Call It an Urban Exodus

Sarah Lorraine Goodman always wanted to settle down in her hometown of Sacramento, California, but life got in the way. After moving to San Jose for grad school in 2009, a job and a boyfriend kept her there.

Then the pandemic happened. Her job went remote, her boyfriend got laid off and leaving the city started making more sense.

“There’s nothing really tethering us to San Jose or the Bay Area, plus it’s just so expensive that there’s no real feasible way for us to have a lifestyle and survive,” said Goodman. The couple bought their first home in Sacramento in March, helped along by low interest rates.

Moves like Goodman’s from the pricey Bay Area to another California city were popular pandemic-era journeys, according to data on U.S. Postal Service changes of address and mail forwarding analyzed by Bloomberg.

A year into the Covid-19 pandemic, after much speculation about emptied downtowns and the prospect of remote work, the clearest picture yet is emerging about how people moved. There is no urban exodus; perhaps it’s more of an urban shuffle. Despite talk of mass moves to Florida and Texas, data shows most people who did move stayed close to where they came from—although Sun Belt regions that were popular even before the pandemic did see gains.

Across the U.S., the number of people making moves that they defined as permanent was up a modest 3% between March 2020 and February 2021. Even with that increase, national migration rates are likely still at historic lows. But zoom in to a few of America’s densest and most expensive metro regions and the picture is more dramatic, with the percentage increase in moves well into the double digits.

Those Americans who did move accelerated a trend that predates the pandemic: Dense core counties of major U.S. metro areas saw a net decrease in flow into the city, while other suburbs and some smaller cities saw net gains. In other words, people moved outward. Outward to the suburbs of their own core metro area, but also farther out, to satellite cities or even other major urban centers that might still give people proximity to their region. As CityLab contributor Richard Florida has noted, the pandemic compressed into a matter of months moves that might have happened in the next few years anyway.

These trends matter to cities as they reckon with the pandemic’s economic fallout. Migration patterns can affect housing prices, tax revenue, job opportunities and cultural vibrancy.

There are signs already that the movement of the past 12 months may prove to be a momentary spike in long-term trends, in a year when the number of new people moving in to cities was stalled by lockdowns, a flagging economy, delayed college starts and immigration restrictions. But the San Francisco Bay Area and New York City region stood out for more dramatic shifts. In different ways, these two regions saw far more movement than in years past, even as the growth of these regions had already begun to reverse before the pandemic.

“The phrase or the concept of urban exodus, that really only applies to New York and San Francisco,” said Stephan D. Whitaker, a policy economist at the Federal Reserve Bank of Cleveland who’s been analyzing migration patterns during the pandemic.

Even in the biggest metro areas, most people didn’t go very far. In the country’s 50 most populous cities, 84% of the moves were to somewhere within the perimeter of the central metro area, down just slightly from pre-pandemic levels. Many of the most local moves were likely related to the economic downturn: A February Pew Research Center survey of those who moved during the pandemic found that the most common reason people cited was financial distress including job loss.

This local movement means that even for residents who did move further from an urban center, many remained part of the same regional economy. And most of those who moved further afield tended to stay within a radius of 100 to 150 miles.

The San Francisco Bay Area tells a more dramatic story. The regions around San Francisco and San Jose, two of the country’s most expensive housing markets, saw the rates of permanent moves increase the most, by more than 23% and 17% respectively, compared to 3% nationally. Moves that were considered temporary—changes of address for six months or less—more than doubled in the San Francisco region, compared to 17% nationally.

As in the rest of the U.S., most people moved within their own region. But compared to other metro areas, a far greater percentage of people left the Bay Area entirely. Many of them moved to other parts of California including Los Angeles, but also smaller and less expensive cities like Stockton and, in Goodman’s case, Sacramento.

For Goodman, who closed on a house in March 2021, her return to her hometown wasn’t just a pandemic-era jaunt or a part-time home. Her boss has allowed her to telework permanently, and her boyfriend sees more opportunity for employment in the Sacramento region’s growing number of breweries.

Mairin Haley, a broker associate at Compass Real Estate in Sacramento, says she’s selling houses to many people like Goodman who are planning to call the state’s capital region their new home.

“Right before the pandemic there were quite a few people that wanted to invest in Sacramento but not necessarily move and leave their lifestyle,” she said. “But I’ve definitely seen a huge increase in people who are willing to leave the Bay Area physically.”

Overall, she estimates that more than half of the people she’s sold homes to recently have come from the Bay Area. Mark Peterson, a real estate agent in Stockton, told an almost identical story: Before, the majority of Bay Area buyers he talked to viewed the Central Valley city about 75 miles inland of the Bay Area as an investment; now more see it as a place to live.

Despite stories like these, the Bay Area’s spike in moves may prove to be a temporary pandemic exaggeration of a trend that predates the onset of Covid-19: In the past few months, the net number of people flowing out of the city compared to those moving in has started to taper off.

New York City

The New York City metro area may be seeing similar patterns. In raw numbers, the nation’s most populous city saw the greatest loss in net moves into the city over the past year. That loss may be starting to decrease again, if February is any indication.

Compared to the Bay Area, the people who moved around the New York region were more likely to stay local: Almost 79% of people who made permanent moves didn’t leave the central metro area.

As the map below shows, many people who moved during the pandemic migrated to as close as the next block or the next borough over. The popular pre-pandemic journey from Manhattan to Brooklyn, for example, remained high on the list. But urban dwellers also moved outward, with the close-in suburbs of Westchester County and Suffolk County on Long Island being some of the most popular destinations for Manhattanites. For people who left the central New York metro area entirely, Miami was indeed a popular destination, as was Los Angeles. But so too were the Bridgeport-Stamford-Norwalk region of Connecticut, much of which is less than 60 miles from Manhattan, and Philadelphia—a 1.5-hour Amtrak ride away. The story of New York City and the surrounding dense Northeast corridor may also be one of a regional labor market that’s expanding in size.

“We see a major move out, to suburbs, to distant suburbs, and to super-markets which maybe cross boundaries,” said Susan Wachter, co-director of the Penn Institute for Urban Research at the University of Pennsylvania. “I expect to see this movement outward accelerate over time.”

In Manhattan, where some neighborhoods were described as empty during the pandemic, some of the most extreme perceptions of “exodus” over the past year might have been partly explained by the region’s precipitous spike in temporary moves of 138%. These are people who said they were changing their address temporarily with an express intention to come back. That figure may not even factor in many wealthy people with second homes.

Who’s moving?

Even for people who said their moves were permanent, wealth was the dominant explanation for the jump in moves in New York City’s five boroughs. While people across incomes continued to move around as they had before the pandemic, it was higher-income zip codes that saw a sharp change in movement at the height of the pandemic.

Nationwide, income was a factor in pandemic movement out of urban centers, according to Whitaker’s analysis. Another analysis by CBRE found that propensity to move increased the most over the last year among young, highly educated urban dwellers.

Income alone wasn’t nearly as clear of a factor in the Bay Area, but a constellation of factors may explain a particular kind of resident who was likely to move out.

San Francisco and San Jose have the highest percentage of people—about 13.5%—in what is known as the “untethered class.” The term, coined by Chris Salviati, a researcher for Apartment List, refers to people not just with a remote-friendly occupation but also a set of other attributes that make it easier to move around to other regions: They have no school-aged children; they rent their home rather than own; and they either have no spouse, or one with the same flexibility (a remote-friendly job or no job). People with these attributes skew younger on average, and earn higher-than-average salaries.

This class of people probably doesn’t account for most moves, but may explain the disproportionate increase in moves out of the region in the Bay Area.

The Bay Area also has a much larger share of people in remote-friendly occupations. Whitaker, who has done his own analyses of migration using credit reporting data, assessed several possible causes for migration during the pandemic and found that the factor most associated with moves out of urban centers was telework. For some, remote work might mean leaving the region. But for many more, it might just mean moving outward from city centers, especially for people who still plan to visit an office some of the time.

“I think that the biggest driver that would cause people to leave a particular area is high-cost housing, and the remote work is now an additional release valve for those really high-cost housing markets,” said Whitaker.

The irony is that this release valve is not available to the majority of American workers, who can’t work remotely, particularly essential workers and low-wage workers. It’s one of several reasons Amy Liu of the Brookings Institution discourages cities from focusing their policymaking on simply attracting remote workers.

“Perhaps it’s a wake-up call”, said Liu, the vice president and director of the Brookings Metropolitan Policy Program, “but the wake-up call was happening even before the pandemic: in terms of affordability, the concerns about whether workers of all genders and races can start a company and work in these industries and make a living in the Bay Area, and do so without long commutes. This actually just creates an opportunity to create the kind of city they ought to be.”

Migration economics

Some impacts of the past year’s migration have already set in. Rents declined in New York City and other expensive urban centers during the pandemic, while they soared in some less affluent regions that saw migration increase, such as Sacramento, research from Zumper shows. And while there are signs that this trend is already reversing, it will take years for rents in expensive urban areas to return to where they were before the pandemic. That has some analysts talking about a structural shift in what landlords can charge. Higher-end apartment buildings in San Francisco, for instance, may be worth about 20% less today than they were before the pandemic, according to Green Street, a real estate research and data firm.

In New York City, this shift has already freed up more homes for Section 8 affordable housing vouchers.

The potential outflow of wealthy New Yorkers, who help to pay a large share of personal tax revenue to the city and state, has been a top concern for many who still remember the city’s fiscal crisis of the 1970s. But there’s been little evidence yet of a major hit to the city’s tax base, says James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at the New School. “The data doesn’t support the argument that out-migration of high-income people weaken the tax base in any way.”

That’s not to say that geographic reshuffling might not have other impacts on city tax revenue, from changes in consumer spending, to dips in property taxes from lower housing prices. To Parrott and others, one of the most important questions going forward will be not who leaves the city, but who moves in.

“The biggest challenge is not so much who would leave or who has left, but who does not come to New York in the first place,” said Michael Hendrix, director of state and local policy at the Manhattan Institute. “That’s where I would say the biggest talent question comes in. We should question whether New York is attractive to new people again and not just for the rest of the country but the rest of the world.”

The attraction game

For some smaller and less expensive cities, more potential for remote work has opened up new opportunities for luring residents. Some have initiated or expanded incentive programs to pay workers who move, while others are looking to expand remote work infrastructure with amenities like “remote work hubs.” Few of these cities saw net gains over the past year, but one exception was Tulsa, which had one of earliest and most-cited programspaying workers $10,000 to move to the city.

Many of the small cities and towns that saw spikes in their population were in regions that were already destinations for migrants pre-pandemic, particularly in Florida and Texas. Others are simply within a 150-mile radius of New York City or the Bay Area. Some of these smaller places have felt the infrastructure and housing cost strain of new resident influxes.

Sacramento, a much larger region of more than 2 million people northeast of the Bay Area, started a campaign to proactively recruit remote workers, dubbed #NEXTOUTWEST. In a bid aimed at enticing companies, too, the region touts its proximity to several universities, workforce training and nearby amenities like wine country and Tahoe skiing. But perhaps in part because of its location advantage, it has stopped short of offering workers monetary incentives. “We’re fortunate. We’re not Tulsa, so we don’t have to give you money to come,” said Barry Broome, president and CEO of the Greater Sacramento Economic Council.

In nearby Stockton, a sizable majority-nonwhite city that’s been deemed the most diverse in America, City Manager Harry Black says while he welcomes the spurt of new residents, attracting them is not part of the city’s strategy. Instead, he wants to attract job opportunities for the people who already live there.

“Really my focus as city manager has and will continue to be trying to get some of those corporations to migrate out here,” he said. “That’s what I would like to see.”

By: https://www.bloomberg.com