The coronavirus pandemic spells the end for big cities — again

Johannes Eisele/AFP/Getty ImagesA woman crosses the street in Times Square amid the COVID-19 pandemic on April 30, 2020 in New York City.
  • Big cities like New York and San Francisco were already starting to lose residents before the coronavirus pandemic.
  • With urban amenities like bars and museums closed, high-paying jobs transitioning to remote work, and rent prices remaining high, young professionals may find it increasingly hard to justify city living.
  • The pandemic is likely to accelerate migration to the suburbs, exurbs, and smaller, less-dense cities.
  • Visit Business Insider’s homepage for more stories.

Chloé Davis has lived in New York City almost her whole life. Her parents moved from Liverpool, England, to the Upper East Side when she was four. As a teenager, she fell in love with the arts scene in lower Manhattan.

“New York was magical then in the early nineties,” she told Business Insider. “There was so much burgeoning. There was so much opportunity.”

She and her husband, Jeremy now live on the Upper East Side. They never planned to leave – even after their sons were born.

“We loved our life. We loved the walkability,” Davis said. “I pretty much know every yenta in the neighbourhood and I can’t swing a handbag without talking to at least five people.”

But when New York City become the epicentre of the US coronavirus outbreak in March, Davis found herself trapped inside a two-bedroom apartment with her husband, three young boys, and four rescue animals. The home felt painfully cramped; the last 50 days have been some of the worst in their lives, she said. Her 10-year-old son had a meltdown on Monday because he wanted to get out of the apartment. All three boys have asked if they can move to a house.

“I realised I can’t do this,” she said. “This isn’t fair to them anymore.”

Davis recently joined a 1,000-person Facebook group for women wanting to leave New York City with their families due to the pandemic. She’s looking at homes in Connecticut or Westchester County.

“This is not a decision I ever would have made without the coronavirus,” Davis said. “It honestly doesn’t even feel like a choice at all. It feels like if you’re a mum and you want your children to not be totally mentally screwed up by this, you’ve got to get out.”

Davis’s family is part of a growing trend of urbanites – including both young professionals and retirees – considering moving to the suburbs as a result of the pandemic.

That’s because the pandemic has fundamentally changed the way we live, work, and socialise: We conduct business on laptops in makeshift home offices and attend classes on Zoom. The amenities that urbanites prize – concerts, museums, and cafés – are shuttered. At a time when physical proximity to others is a danger, many city-dwellers are beginning to fundamentally question the appeal of density – and how much they’re willing to pay for urban apartments.

“What makes the experience of going to New York great? It’s the restaurants. It’s the clubs. It’s the feel of all the people together, that kind of excitement,” Joel Kotkin, an urban studies professor at Chapman University, told Business Insider. “You take a lot of that away and the allure isn’t so great.”

Suburban Jungle, the real-estate company David is using, said it has seen a fourfold increase in its clientele compared to the same time period last year. The coronavirus, therefore, seems to be catalyzing a trend that had already started: slow-moving migration toward suburbs, exurbs, and smaller, less-dense cities. The era of the big city has, yet again, run its course.

‘A profound, psychological change’

Agents in Connecticut and Westchester are “inundated with demand for short-term rentals” at the moment, Steven Gottlieb, a real estate agent at New York-based Warburg Realty, told Business Insider.

Glenn Kelman, the CEO of real-estate company Redfin, recently told CNBC that “rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city.”

“There seems to be a profound, psychological change among consumers who are looking for houses,” Kelman added.

Even Davis, who previously planned to stay in New York, said the city has changed in the last decade. Growing up, her friends’ parents all had different careers. Now, most of the local parents she knows work in finance.

“I’ve watched all my artist friends slowly eke out of New York,” she said. “It’s not really a place for everyone anymore.”

Davis familyChloé DavisChloe and Jeremy Davis with their sons.

The pandemic may force even more artists, musicians, and small-business owners to move away from big cities as a growing number of workers face unemployment.

Offices are going virtual and workers are being laid off

In total, more than 700,000 people filed for unemployment in New York City from March 14 to April 25. In the San Francisco Bay Area, around 74,000 people were furloughed or laid off in April – more than five times the number of furloughs and layoffs reported in March.

Juliet Paramor, a 25-year-old dancer, recently told the San Francisco Chronicle that she’s moving in with childhood friends in Washington after losing work in San Francisco due to the pandemic.

Other city dwellers have chosen to leave voluntarily as their companies transition to remote work.

Empty coworking space san franciscoJosh Edelson/AFP/Getty ImagesParisoma, a coworking space, seen mostly empty in San Francisco on March 12, 2020.

Before the pandemic, the research group Global Workplace Analytics estimated that just 3.6% of the US workforce worked at home at least half the time. But the group recently predicted that 30% of the workforce will work from home multiple days a week by the end of 2021.

That means employees may not need to live in the city where their company is headquartered.

Gottlieb said a couple he works with recently chose not to renew their lease on a one-bedroom apartment in Chelsea in favour of renting a large house with two dedicated home offices in Connecticut.

“One of their priorities prior to the pandemic had been the ability to walk to work,” Gottlieb said. “That’s no longer even on the table because they’re both telecommuting.”

Bars and restaurants are closed. What’s a city without them?

Amy Glasmeier, a professor of economic geography at MIT, told Business Insider that two main factors influence human migration: identity and income.

Those who can afford to move to cities often do so for job opportunities, but they’re also searching for a place that reflects who they are and what interests them.

A 2019 study found that amenities like restaurants and nightlife were the driving factor behind the migration of young college graduates toward big cities from 2000 to 2010. The real-estate industry uses urban amenities to create a “mythical form of value,” Glasmeier said. It’s why some San Franciscans pay $US4,200 per square foot to buy a Pacific Heights apartment with proximity to luxury boutiques, old-fashioned movie theatres, and trendy cafés.

San francisco closed box officeEzra Shaw/Getty ImagesA view of the closed box office at the Chase Centre, where the NBA Golden State Warriors play, on March 12, 2020 in San Francisco, California.

With these shops and cultural activities shut down, however, the pandemic has forced many urban residents to ask themselves if their city is worth the price tag.

“To live in a shoe box and not have access to restaurants and concerts and museums and sporting events – that’s not worth it for many people,” Gottlieb said.

Millennials are less willing to gamble on urban real estate

For many low-income city residents, the financial burden of moving means leaving is simply not an option. Plenty of people also choose to stay in a particular city because they grew up there.

But among those who are willing and able to migrate – usually younger college graduates – the price of city life was already getting prohibitively high.

The median rent for a two-bedroom apartment in New York City is around $US3,500 – more than double the national average. A 2019 study from GoBanking Rates found that New York renters would need to earn at least $US128,000 a year to live comfortably. San Francisco renters need to earn even more – $US164,000 a year – to afford the city’s $US4,500 median rent price, the study found.

“We were moving into something that simply couldn’t work for the vast majority of the population,” Kotkin said. Before the pandemic, he added, cities were already starting to consist of “poor people or rich people or young people trying to figure out how to get out.”

In their lifetimes, millennials have undergone three devastating economic downturns – the Afghanistan war, which fed into the 2001-2002 recession, the financial crisis of 2008-2009, and the current pandemic, whose effects are still playing out.

San francisco rentJustin Sullivan/Getty ImagesReal estate agent Brad Smith talks with potential home buyers as they look at a newly constructed condominium December 30, 2008 in San Francisco.

These cycles have left them without much room to gamble on real estate – and these days, it can be twice as expensive to buy a home in the city than the suburbs.

“The millennials who were willing to live in cities now are going to start forming families and move to the suburbs because it’s too expensive,” Glasmeier said. “They’re going to be forced into locations where there is less danger of loss of value of assets.”

Davis said that for her, the choice is more a product of a change in mindset.

“I might end up feeling a little bit lonely and a little bit alienated, but what am I doing now?” she said. “I’m Zooming with my friends. I’m having online cocktail dates. It wouldn’t change.”

A decades-long exodus from cities

New york closed restaurantMichael Nagle/Xinhua/Getty ImagesA closed sign in a restaurant during the coronavirus pandemic in New York on April 16, 2020.

Gottlieb said he thinks the flight away from big cities is a temporary, knee-jerk reaction to the pandemic.

“I know a lot of people, clients and otherwise, who are really exploring short-term rentals in various parts of the country,” he said. “They have apartments in Manhattan that they are walking away from for now. They’re not selling, but they’re not using them.”

Frederick Warburg Peters, the CEO of Warburg Realty, recently told Business Insider that he experts the pandemic to affect New York City’s housing market in a manner similar to 9/11 and the 2008 recession: Housing prices will go down by around 10% to 20%, then return to normal within a year or two after the city’s shelter-in-place order is lifted.

A similar trend occurred after Hurricane Sandy in 2012. In the immediate aftermath of the storm, Sandy was at the forefront of buyers’ minds. Within a year or two, those concerns seemed to dissipate and property values along the coast of New York and New Jersey started to climb again.

But Sandy and 9/11 occurred at a time when urban real estate was highly coveted.

“The problem with COVID is it’s happening at a time when cities were actually already losing ground,” Kotkin said.

The pandemic is also a global tragedy, not a local or national one. As such, its effects may be more akin to those of World War II, which sparked a decades-long trend of suburbanization. Before the war, 13% of Americans lived in suburbs. By 1970, that figure had risen to 37%.

Kotkin said he expects to see a period of retrenchment in cities for the next five years at least.

Cities go through boom and bust cycles

Though there is little historical precedent for the current pandemic, cities do undergo cycles. Urbanist Jane Jacobs famously described the city as a living organism: It lives, dies, and is reborn.

In the 1950s, with World War II over, wearied soldiers quickly got married and had kids. Congress created a program that granted married, white servicemen access to low-cost mortgages. Instead of squeezing into urban apartments, a higher number of families could afford a home and a car with which to glide across America’s newly minted highways.

By the 1970s and 1980s, cities had been somewhat hollowed out by this mass migration – and the decline in factory jobs that held up the economy during wartime. But things changed again in the first decade of the 2000s. Cities sprung back to life as young college graduates chased jobs at startups and tech companies or found themselves lured by the cultural vibrancy of urban communities.

After the 2008 crash, migration to big cities started to slow again; however, in the decade to come, urban rent prices skyrocketed as construction costs soared and housing became limited. That, consequently, forced many lower- and middle-income residents to move to the suburbs or exurbs, while millennials were increasingly drawn to smaller cities that offered more affordable lifestyles.

That’s where we found ourselves before the coronavirus hit: Nearly 27,000 adults ages 25 to 39 left big cities in 2018, according to a Wall Street Journal analysis of Census data. From 2014 to 2018, domestic migration was down by more than 3% in New York City and Los Angeles. San Francisco, Philadelphia, Boston, and Washington, DC, all lost more residents than they gained, too.

Small- to mid-sized cities, by contrast, have been attracting a greater share of millennials in recent years. From 2014 to 2017, Austin, San Antonio, Nashville, and Dallas had more residents ages 25 to 34 than Los Angeles, New York, or Washington, DC, according to Census data. Over roughly the same time period. net domestic migration to Nashville and San Antonio, Texas, rose by more than 4%, and net domestic migration to Austin, Texas rose by 6.5%.

Austin texas coronavirusDave Creaney/Anadolu Agency/Getty ImagesCiscos on historic East 6th Street, one of the few restaurants that re-opened its dining room after Governor Greg Abbott loosened restrictions in Austin, Texas, on May 1, 2020.

Suburban growth also outpaced city growth from 2015-2016 and again from 2016-2017, according to a Brookings analysis. A 2018 survey from Ernst & Young found that more millennials are buying homes in the suburbs than in cities; the share of millennials purchasing suburban homes increased by 14% over two years.

“So many of the very good things about urbanism are now being transferred to suburbs,” Kotkin said. “They have become more diverse. They have more cultural activities. The new suburbs that are being built are less about golf courses and more about bike trails.”

But no migration pattern lasts forever.

“Once you bring back all of the reasons people love New York City, then being secluded in the country might not be so appealing anymore,” Gottlieb said.

Davis said her family will likely stay in the suburbs until her kids graduate high school, but she’s open to returning to Manhattan someday.

“If we love it, we might never come back,” she said. “But life changes in a blink. Nothing is permanent.”

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