Via the Washington Post, here’s a fun map of Minneapolis showing the percentage change in average home prices in Minneapolis (and other cities too). The map supports the basic “return to the city” argument, about how more people are moving into the urban core.
Here’s the 15-year trend:
The article looks at a few different cities and picks Minneapolis as one its exemplars. Here’s the key point, citing a famous urban economist:
“This is really new confirmation about the shift in demand for the urban core of America away from the urban periphery,” says Harvard economist Ed Glaeser. “The thing about the resurgence of central cities is not that suburbia is dead – as much as people love that story line, it’s not true. What is true is if you look at places like New York in 1970, demand for those cites was quite low, and it’s radically different today.”
A recent Washington Post analysis of home price data since 2004 found a similar pattern particularly in the Washington area: Suburbs far from the center of the city fared relatively poorly over the course of the bubble, bust and recovery, as home prices in close-in neighborhoods boomed. The FHFA data, extending further back in time, shows a similar picture in Minneapolis and Portland, Chicago and Denver, Atlanta and Philadelphia. The same is true in Boise, Idaho; Columbus, Ohio; and Nashville. Even in Sunbelt cities such as Phoenix and Houston. (The FHFA has an interactive map here.)
To me, a 15-year data set is pretty significant, so I find this map pretty convincing. I’d only add the caveat that, back in 1990, downtown didn’t have many housing units period. Or if there was housing down there, it was often subsidized.
For example, the townhomes along the North Loop waterfront date back to the mid-90s (if I recall correctly from my Judith Martin lectures). That’s a far cry from today, where the area is one of the “15 hottest” in the US, according to real estate developers.
(Also, check out where the declines are located:
first-ring second-ring suburbs in the North Metro. That should be the subject of another post or two!)
How do these data compare to national trends in housing price changes, both urban and suburban?
My own take is that Brooklyn Park has a reputation for crime that’s scaring off a lot of potential buyers and there’s not a compelling reason to live in Coon Rapids as opposed to similar housing elsewhere with the difficulty in getting to the rest of the metro area. If MN 252 had been built as a freeway as originally planned and is planned now things might be different.
Suburbs also seem to have life cycles, where values go up as they first get developed and then may wane as the initial purchaser age. Seems like the first ring has managed to swing back again, though.
There’s probably a relationship between first ring suburb health and overall urban core health. People aren’t leaving the suburbs for the city, but could they be ditching the mcmansion for a sweet commute back from a merry night of Uptown ruckus? And maybe they’re doing that less if the core hasn’t revitalized?
that seems, anecdotally, to have a lot to do with infrastructure costs – early on if the infrastructure is all subsidized, it’s super cheap. Then you hit a point where people have to start paying for upkeep and replacement and suddenly local taxes are an issue. I’d love to see actual data that either proves or disprove that impression, though.
I really worry that what’s happening is people with capital are moving into the city and people without capital into the second-ring suburbs just as there’s more costs to bear in the outer burbs.
Interesting that the other 4 cities show a fair amount of yellow but we show no yellow at all.
I also noticed the other cities that were mapped showed much greater increases. I think if we had data up to this summer we’d be seeing an even greater spike in a select few zip codes.
Minneapolis had a crash. DC, Portland, Denver, didn’t really.
The loss I took selling my DC condo says otherwise, but perhaps DC just had a shallower crash that it recovered from more quickly.