I’ve finally had enough of the headlines, anecdotes, “anec-data.” Everyone thinks COVID is driving people crazy and ditching their city for the outskirts. I hear over and over that this is a new trend we need to watch.
“New York City is dead“… “I heard my buddy is moving to the suburbs… maybe even a different state”… “Miami will become the new Silicon Valley / NYC.” Guess what? Moving from the cities to the suburbs has been happening for decades.
Look, I’m not defending New York City. It is losing share of population. I’m pointing out a terrible narrative bias problem. Narrative bias refers to people’s tendency to interpret information as being part of a larger story or pattern, regardless of whether the facts actually support the full narrative. In this case, COVID killed New York, or San Fran, or the office building, etc.
I’ve got 4 points on this.
Zelman is the leader in real-estate research. They recently had a great blog post on this “new trend.” As they detail, Wyoming and Montana realized a gain in population growth. Is Wyoming the new New York City thanks to COVID???
No. As they say, the 2010-2020 timeframe will mark the fifth consecutive decade in which population growth for the most dense states at that time ranked as the weakest quintile.
Where were these Miami headlines before when CT, NJ and NY were losing population share?
There are three other points I’ll make:
Talk to me when all of the allure of the major cities is able to turn back on, not when when it is closed.Similar to seeing E-commerce sales boost in Q2, we have to remember the alternative (brick and mortar) was largely shut down. Similarly, nearly all the benefits of a city have been taken away – colloboration in person at work, grabbing beers at 5pm on a Friday with everyone, going to the bars and great restaurants in general. Its no wonder to me that NYC is being cast out (with its current, stricter rules) in favor of Miami (which anecdotally seems like its operating back-to-normal).
Second, millennials. Millennials are finally aging into marriage and children age (the eldest millennials are nearing 40, while the youngest are mid-twenties). Households will be getting larger soon. No more living in the basement with mom and dad that was all the rage post financial crisis. Millennials now have enough savings to buy a home vs. the condo (especially with the drop in interest rates).
Therefore, it surprises me not at all that there is a boost in suburban sales.
Lastly, people have been congregating for thousands of years. In my sociology class in college, I learned the theory that if something has persisted for thousands of years in society, it probably has a purpose. I think humans will continue to congregate in cities, maybe just not the Northeastern or Western ones that have high taxes.
“But DD – we now have video conferencing! No need to go into the office!” We’ve had video conferencing for at least a decade. Everything thinks it works much better now. Maybe it does. But I think it works the best now because everyone is using it. Once half the team goes back into the office (including the Boss), people will start to not like it again. “Bill – you are on mute” isn’t as forgivable when everyone is in person except for you.