Are cities losing their luster

Published October 24, 2019

By Michael Walden

One of the biggest changes in recent decades has been the revival of big cities.  Through the birth and development of the automobile age – when the auto brought enhanced mobility to households and businesses – suburbs grew at the expense of inner cities.  But during the 21st century this trend reversed, and many inner cities were reborn and rehabilitated.

Downtown living became fashionable.  Young people, especially college grads who were single and without children to raise, flocked to the excitement of living in cities packed with restaurants, entertainment, and often jobs within walking distance of their residences.  Even better for them, there was reduced need for vehicle ownership and the costs of buying and maintaining cars and trucks.   In fact, these new urban pioneers spawned entirely new ways of travel, such as ride-sharing, scooters, and bike rentals.

The results of this downtown living can be seen in most big cities, including those in North Carolina.  Just look at the skylines of Charlotte, Raleigh, Durham, Asheville, Winston-Salem, Greensboro and others.  You see cranes – lots of them – building high-rise condo buildings and multi-use skyscrapers.  Raleigh just approved not one, but two, buildings that could extend up to 40 stories.

This burst of living and building in downtowns has not been without controversy.  Some of the neighborhoods where development has occurred had been home to modestly priced dwellings where households with low to moderate incomes could live.   The worry is where those folks will go when the bulldozers arrive.

The attractiveness of inner cities has also bumped up against the economic reality of supply and demand, perhaps best stated by the iconic writer and humorist Mark Twain.  Twain once advised, “buy land, they’re not making any more of it.”   As more people want to live downtown, the economic value of inner city sites increases.   Developers can “create land” by constructing taller buildings on sites, but that adds to the cost.  The more popular downtown living becomes, the more expensive it is.  Housing affordability has become a big issue in most big cities.

Which raises the question, can the downtown boom last forever?  Will there be factors that will lessen, or even end, it?

The question is very pertinent now as a result of a just-released U.S. Census report.  The report revealed Millennial generation households aged 25 to 39 are beginning to move out of big cities to the suburbs.   They were more than replaced by the next younger generation (Gen Z), so big cities are still gaining younger people.  Still, there is the question of why the oldest of the young – those from ages 25 to 39 – are leaving the city?  

One answer may be housing costs.  Maybe a person is willing to absorb those higher costs fresh out of college when the urge to party and try new restaurants is high.  But even for the most avid “fun person”, partying can get old as you get older.  So a cheaper residence in the suburbs can look more attractive when age 40 is just over the horizon.

Yet I think the most persuasive answer for the 25-39 set moving to the suburbs is life cycle.  After dropping out of high school and fighting in World War II, my father married and started a family in his early 20s.  The first home I was raised in was an 1100 square foot bungalow in the first ring of suburbs outside of Cincinnati.

Today’s youth who go to college don’t finish school and begin work until their mid to late 20’s.  Add a couple years for post-school exploration, and today’s young people aren’t “settling down” and marrying or partnering and having children until well into their 30s.  

Living in a downtown high rise can be fun when you’re single.  But then add a spouse or partner, children, strollers, and pets for the children, and high rise living isn’t as great.  Instead, a single-family home in the suburbs with more inside and outside space looks much better.

So cities may not be losing their allure.  It may just be that the preferences of some of today’s city residents are changing.  The “older-young” in the city now want a more tranquil and sedate lifestyle – one that the suburbs can provide and the city can’t.

It will be interesting if the locational preferences we’re seeing for the Millennials will eventually be repeated by Gen Z.  This is important because where people want to live have enormous implications for transportation, commuting, housing prices, and economic development.  

Choosing where and how to live is one of an individual’s most important decisions.   Is there a pattern to these choices determined by where we are in our age cycle and personal responsibilities?   You decide.

Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook, and public policy.