- American cities are still expanding, just at different rates.
- Most cities fall into two categories -- expensive and expansive cities. Expensive cities, such as San Francisco, build their economy on higher property values due to limited space. Expansion cities, such as Atlanta, build their economy on population growth due to building more homes.
- The chief economist of BuildZoom says expensive cities could be made more affordable by promoting regional government, rather than hyperlocal government, whose regulations tend to dampen construction.
BuildZoom, a company that helps consumers find competent contractors, released a study on the expansion of American cities over the past 60-plus years.
According to BuildZoom’s chief economist, Dr. Issi Romem, the expansion of cities as a whole hasn’t slowed down. In fact, many are expanding a similar rate seen in the 1950s.
But when you dive deeper into the data, the story becomes a little different. The majority of cities fall into two categories — expensive cities or expansive cities.
Strength through wealth
Expensive cities, such as San Francisco, Boston, New York, Seattle, San Diego, Washington, Philadelphia, Portland and Miami, have slowed their outward expansion and look to higher property values to build economic strength.
Expensive cities are often limited from expanding because of natural geography and restrictive land use policies.
Because of these factors, these cities have what Romem calls an “inelastic” supply of housing, which means developers respond to rising property values by building a limited number of new homes. Romem uses the Bay Area, specifically San Francisco, as the perfect example of an expensive city.
San Francisco has a strong tech community and job opportunities thanks to companies, such as Spotify and Twitter, that attract young, educated professionals in droves.
Unfortunately, many of those professionals simply can’t afford the rent and mortgage costs, which means only the affluent are able to live and thrive in San Francisco and other cities like it. This is where expansion cities come into play.
Strength through growth
Expansion cities, such as Atlanta, Austin, Charlotte, Houston and Phoenix, have channeled and built their economic strength by creating a greater population through expansion.
These cities’ geographies and less restrictive land policies work in their favor so developers can easily respond to home price increases by building a large number of new homes. These cities’ economies are built through booming population growth, which is oftentimes comprised of those who were priced out of expensive cities.
Lastly, Romem discusses legacy cities, which are cities in economic decline where there is little-to-no demand for housing. Detroit, Cleveland, Kansas City, St. Louis, Milwaukee and Pittsburgh fall into this category.
So, what about the future?
“A likely scenario is that as expansive cities continue to grow larger and wealthier, they will gradually accrete their own set of restrictive land use policies,” says Romem. “As this happens, the circumstances in expensive cities today may become more commonplace throughout the country.”
Another less-likely scenario is that expensive cities find ways to build a sufficient amount of new housing to bring costs down through densification, renewed outward expansion or a mixture of both. Furthermore, Romem suggests the advent of self-driving cars and other technologies will change our land use so much that people can comfortably live farther away from the city center than today.
Lastly, an article published in The New York Times offers another scenario that Romem says could help expensive cities bring down costs and reduce the pressure on hyperlocal governments when it comes to the costs of development.
Parag Khanna, a senior fellow at the Lee Kuan Yew School of Public Policy in Singapore and author of the forthcoming book “Connectography: Mapping the Future of Global Civilization,” says that America is “reorganizing itself around regional infrastructure lines and metropolitan clusters that ignore state and even national borders.” The only issue is that our political infrastructure has yet to catch up to this new way of thought.
“If we’re going to make any progress in reforming land use, and allowing those cities that have been geographically limited as opposed to expanding outward, we need to promote regional government,” Romem says. “Housing markets and labor markets operate at a regional level not a hyperlocal level.”