Big U.S. cities boom as young adults shun suburbs

Posted on July 3, 2012

For the first time in a century, most of America’s largest cities are growing at a faster rate than their surrounding suburbs as young adults seeking a foothold in the weak job market shun home-buying and stay put in bustling urban centers.

New 2011 census estimates released Thursday highlight the dramatic switch.

Driving the resurgence are young adults, who are delaying careers, marriage and having children amid persistently high unemployment. Burdened with college debt or toiling in temporary, lower-wage positions, they are spurning homeownership in the suburbs for shorter-term, no-strings-attached apartment living, public transit and proximity to potential jobs in larger cities.

While economists tend to believe the city boom is temporary, that is not stopping many city planning agencies and apartment developers from seeking to boost their appeal to the sizable demographic of 18-to-29-year olds. They make up roughly 1 in 6 Americans, and some sociologists are calling them “generation rent.” The planners and developers are betting on young Americans’ continued interest in urban living, sensing that some longer-term changes such as decreased reliance on cars may be afoot.

The last time growth in big cities surpassed that in outlying areas occurred prior to 1920, before the rise of mass-produced automobiles spurred expansion beyond city cores.

New Orleans, which saw its population shrivel in the mid-2000s due to Hurricane Katrina, saw the biggest rebound in city growth relative to suburbs in the last year, 3.7 percent vs. 0.6 percent. Atlanta, Denver, Washington, D.C., and Charlotte, N.C., also showed wide disparities in city growth compared to suburbs.

Other big cities showing faster growth compared to the previous decade include Boston, Chicago, New York, Philadelphia, Minneapolis and Seattle.

“I will never live in the suburbs,” said Jaclyn King, 28, a project director at a Denver hospital. King, who grew up in the Denver suburb of Littleton and attended Columbine High School, still remembers her parents’ 45-minute train commute to the city each day for work. She now rents a Denver house with her fiancé.

“I just like being connected to everything down here — concerts, work, restaurants, all of it. This is where everything’s at,” said King, who biked 6 miles to her job on a recent morning.

Businesses are taking notice. “Companies are really seeking to meet the need of younger people who are choosing to live in cities,” said Royal Shepard, an analyst with S&P Capital IQ in New York, who tracks the residential and commercial real estate market. The ratings agency has a “positive fundamental outlook” on residential real estate investment trusts, particularly those with holdings in multifamily apartment buildings, citing in part a demographic shift.

“The recession hit suburban markets hard. What we’re seeing now is young adults moving out from their parents’ homes and starting to find jobs,” Shepard said. “There’s a bigger focus on building residences near transportation hubs, such as a train or subway station, because fewer people want to travel by car for an hour and a half for work anymore.”

Katherine Newman, a sociologist and dean of arts and sciences at Johns Hopkins University who chronicled the financial struggles of young adults in a recent book, said they are emerging as a new generation of renters due to stricter mortgage requirements and mounting college debt. From 2009 to 2011, just 9 percent of 29- to 34-year-olds were approved for a first-time mortgage.

“Young adults simply can’t amass the down payments needed and don’t have the earnings,” she said. “They will be renting for a very long time.”

The numbers are based largely on an analysis of census estimates as of July 2011 for cities and “primary cities,” defined as boundaries of incorporated divisions and closely interrelated adjacent areas, by William H. Frey, a demographer at the Brookings Institution. They are supplemented with data from the New York Federal Reserve as well as Kenneth Johnson, a sociology professor at the University of New Hampshire.

Primary cities in large metropolitan areas with populations of more than 1 million grew by 1.1 percent last year, compared with 0.9 percent in surrounding suburbs. While the definitions of city and suburb have changed over the decades, it’s the first time that growth of large core cities outpaced that of suburbs since the early 1900s.

During the mid-decade housing boom, city growth came close to a standstill as the wide availability of low-interest mortgages pushed new residential development outward.

In all, city growth in 2011 surpassed or equaled that of suburbs in roughly 33 of the nation’s 51 large metro areas, compared to just five in the last decade.

“City growth in recent years clearly has ramped up faster than suburban growth has declined, suggesting an increased attractiveness of cities,” Frey said. “The real question is, will cities continue to hold their own when the suburban housing market picks up? Cities that market themselves well to young people and that offer job growth, cultural amenities and access to rapid transit are likely to see continued growth.”

In Denver, for instance, civic leaders have been actively promoting their city to young, educated professionals ages 25 to 34, touting in brochures the city’s “walkable urbanism” including a newly formed Theatre District, pedestrian walkways, high-rise apartments, bicycle lanes and a variety of sidewalk cafes and restaurants.

Similar efforts have been under way in other larger cities across the U.S., including Chicago, New York, Philadelphia, San Francisco, Seattle and Washington, D.C., seeking to turn excess city asphalt to greenery with new planters, small parks and pedestrian plazas.

In recent years, the share of 16- to 39-year-olds with driver’s licenses has declined markedly. The suburb also is no longer a refuge from poverty, now surpassing cities in numbers of poor people.

Still, some economists aren’t so certain “generation rent” will last. They point to practical considerations such as better schools in the suburbs, continued government tax breaks for home ownership and subsidies for travel in rural areas, as well as rapidly rising downtown rents, that are likely to push young adults to the suburbs once they sort out decisions about jobs, kids and finances.

Symm Vafeades, 33, isn’t so sure. Growing up in Denver, he briefly moved outside the city as an adult to experience suburban life. Before long, though, he was back in town. Vafeades said he likes being able to stop at his favorite shop for iced coffee and a breakfast burrito on his way to work instead of sitting in traffic. His commute to his job as an architect clocks in at just 2 miles.

“I much prefer living in the city,” Vafeades said. “There’s just a lot more you can do without having to drive everywhere.”

Other findings:

—Roughly 52 of the 73 cities with population of greater than 250,000 showed faster annual growth (or slower rates of losses) in 2011 than their average growth over the last decade. Cities switching from declines to gains included Pittsburgh, Milwaukee, Minneapolis and St. Paul, Minn.

—Texas dominated the list of the 15 fastest-growing large cities from April 2010 to July 2011, including Round Rock, Austin, Plano, McKinney, Frisco, Denton, McAllen and Carrollton.

—The city of Chicago added nearly 9,000 people last year compared to annual losses of roughly 20,000 in the last decade, having benefited as fewer moved to the outlying exurban areas of Will and Kendall counties. Detroit saw much smaller losses last year, a sign that its 25 percent decline over the past decade has bottomed out.

—New York remained the most populous city at 8.2 million, followed by Los Angeles and Chicago. The 15 most populous cities were unchanged since the 2010 census with the exception of Austin, Texas, which moved up from 14th to 13th, supplanting San Francisco.

By: Hope Yen and Kristen Wyatt, The Associated Press