There were a few notable take-aways in the new 2020 United States Census data, released last month. While population growth across the country was as expected, exactly how and where that population grew surprised many—and bucked many prognostications by experts and media outlets over the last decade, and in particular the increasingly trendy “death of the city” predictions of the past few years.
We reviewed some high-level data to highlight how they might affect strategies for real estate developers in the coming decade.
While media stories have focused on people leaving cities for suburbs—accelerated by the explosion in remote work driven by the pandemic—the last decade has actually seen huge growth in metropolitan areas, while rural counties shrank significantly.
Some have pointed out that much of this metropolitan growth has happened on the outskirts of many cities, where land for new construction is available—offering more space and amenities for potential residents. This could exacerbate the issues caused by suburban sprawl, but it does point to a desire for people to live close to cultural and economic centers.
The worldwide urbanization trend continues, and developers who offer competitively priced, amenity rich homes in these areas are making a smart bet on future growth. In development friendly cities, there are ample opportunities for more urban infill, redevelopment projects, and more.
While cities in the Sun Belt experienced big growth, it was not a zero sum game for cities further north. Nearly every city along the Atlantic seaboard experienced significant growth.
The general narrative across the last 20 years has been that as Sun Belt cities grow, northern cities dwindle—the idea being that their high cost of living was driving people south where housing and taxes were lower.
However the latest Census shows this to be a misleading narrative. Cities across the nation grew in population, often beating national growth trends. New York City grew by 7%—gaining nearly the entire population of Boston or DC in just ten years. Chicago grew by 2%. Boston and Philadelphia saw their populations grow by 10.5% and 5.1%, respectively. Along the Atlantic seaboard, only Baltimore saw its population diminish—every other major metropolitan area experienced growth.
Urban cores across the country are attracting new residents every day. While the growth rate in Sun Belt cities tends to lead the way, just about every coastal city, and every other major city in the US, saw a significant jump in population.
There have been no shortage of headlines during the last 20 years declaring the death of the “Rust Belt”—those former boom towns throughout the Midwest whose manufacturing economies all-but disappeared in the last half century.
But hold the presses! The Rust Belt is making a comeback.
Cities like Buffalo, New York, (home to 40+ Ori Cloud Beds at Campus West) grew in population for the first time in seventy years. Similarly, Cincinnati, Oho, grew for the first time since the 1950s, while Columbus, Ohio, posted 15% growth.
Certain small-to-midsize cities in the Midwest are also the fastest diversifying communities in the entire country. As just one example, one in seven residents in Columbus, Indiana, was born outside the United States.
It’s not all sunshine and rainbows across the Midwest, however. Plenty of Rust Belt cities continued their population declines—Youngstown, Ohio, lost 10%, Flint, Michigan, hit its lowest population in over a century.
Don’t count out any large region of the country when it comes to potential new developments—after a long period of decline, many are now in transition, with fast growing, revitalized population centers attracting jobs, people, and diversity.
Despite all this growth, growth in housing units was unable to keep up. Vacancy rates fell from 11.4% in 2010 to 9.7% in 2020. This problem was exacerbated in Sun Belt states with high growth rates, with Nevada (14.3% to 8.1%), Arizona (16.3% to 12.2%) and Florida (17.5% to 13.5%) experiencing the most dramatic drop in vacancy rates.
Worse yet, growth in new construction slowed over the last decade. From 2010 to 2020, the total number of housing units grew by just 6.7%. This is half the growth rate seen over the previous decade.
The Census Bureau rightly points out that a number of factors influence this slowed growth, such as the fact that the years between 2000 and 2010 saw the housing bubble that crashed in 2008. This naturally slowed demand for new housing towards the beginning of this decade. However, it still shows that demand is often outpacing supply.
The future looks bright for innovative developers willing to make bets on up-and-coming cities across the country. For those looking to give their projects an extra competitive edge, Ori can help you design floor plans with added density, improved building economics, and greater experiential appeal to incoming residents.