Joseph Politano: price changes within US cities
Post-Covid, prices are up across the board, not just in cheaper neighbourhoods
The New Economic Geography of the Housing Shortage. Joseph Politano, November 2023.
Joseph Politano (Apricitas Economics) is a former analyst with the Bureau of Labor Statistics. In this newsletter he describes how Covid and the sudden increase in remote work has changed the pattern of home price increases within US cities.
After the US housing bubble burst, around 2005-2006, homebuilding basically collapsed, taking a decade or so to recover. The shortage of new homes resulted in high rent increases in cheaper neighbourhoods especially, as higher-income households looked for affordable housing. (See: gentrification.) Prices didn’t rise nearly as much in more expensive neighbourhoods, which is why the green line in the Dallas graph slopes sharply downward.
After Covid hit and there was a sudden massive surge in remote work, the pattern changed: suddenly there was a lot more movement between metro regions, with people moving from especially expensive cities (like San Francisco) to more affordable ones (like Dallas). Politano says that this was true for both higher-income workers who could work remotely, and for lower-income workers who could more easily find work because of stronger demand for labour. The result was that prices rose across the board, not just in cheaper neighbourhoods: the yellow line in the Dallas graph is basically flat.
Did the same thing happen in more affordable Canadian cities, like Montreal, Halifax, and Edmonton? I think you’d need to take a close look at the data (as Politano did for the US) to say for sure.