This post is coming fresh off the heels of a Wall Street Journal article about how the young and wealthy are picking cities over the suburbs that their parents have embraced for so many decades. With this significant shift in the outlook towards large cities, populations are continuing to swell in urban neighborhoods, with municipalities attempting to keep up with infrastructure needs. This is also causing significant pressures on the housing stock across the country.
According to the WSJ article, this rate shift from suburb to city living in this young and high-income demographic has not been seen ever before.
Check out the metrics below, compliments of the WSJ:
The recurring theme here with this urban growth is that developers are having a hard time keeping up. There just aren't enough apartments to keep up with the burst in demand, which has been fueled by job growth, low interest rates and an improving economy. So how is this impacting housing costs? Rents are increasing and so are property prices.
In New York City, established neighborhoods have become out of reach for many, and many other neighborhoods are going through a wave of gentrification. Consider neighborhoods like Central Harlem, Long Island City, Bed-Stuy, Bushwick and Crown Heights. A decade ago, there wasn't a whole lot of new development in these areas. Now it's clearly visible on every block.
As the housing stock increases, new retail is breathing new life into neighborhoods as well. Neighborhoods across NYC are quickly changing, while prices continue to rise as well. While the job market continues to remain strong and interest rates continue to stay low, it can be expected that this cycle will continue unabated.
It's not just NYC that is being impacted by this demographic shift. I have previously outlined the Mega Trend that is Challenging the American Dream here. Cities across the country are being equally impacted. The increasing tax base will be a boon for cities that have gone through declines as industry faded away and recessions have swept over. Some are finding a rebirth that needs to be well balanced with residents who have watched these areas through good time and through bad.
Whatever your perspective is on this demographic shift, change is always coming. It's all a matter of how you react to it. Cities will continue to transform in front of our very eyes.