From Forbes

Earlier this year, the U.S. Census Bureau shared its latest data concerning suburban population demographics from 2016 to 2017, revealing a trend that many had long suspected: As more big cities become less affordable, people are moving back to the suburbs.

After several years of urban growth, America is once again seeing an urban flight to the suburbs. In 2017, New York City saw 143,000 people move out, making it the first time since 2007 that the city did not lead the country in population growth. For the New York metropolitan area, the suburban population growth of 2016-2017 exceeded the city population growth — as was the case in 36 of the 53 largest metropolitan areas in America.

This move away from major, dense urban environments is largely a result of the urbanization in the first half of the decade. From 2010 to 2014, cities saw the fastest growth they had seen in decades. In the span of four years, nine of America’s 25 largest cities saw growth rates of at least 1%, a significant increase from the average rate of 0.49% the decade before. Headlines such as “Decade of the City” and “Cities Thrive, Suburbs Sputter” were common in the media in 2013, and many were quick to show that city life was in the midst of a hot renaissance.

Not So Fast

Five years later, much of that enthusiasm has been tempered. The May 2018 data suggests that the growth in cities was only a blip on a broader trend towards suburbanization. Extreme productivity in places like New York City and San Francisco led to skyrocketing housing prices and wage gaps. Cities have had a hard time keeping up with the demand for housing and keeping it affordable for residents. In May 2012, the average home price in Brooklyn, New York was $480,000. In May 2018, it was $786,000.

As affordable housing in cities became scarce, middle-income earners found solace in the housing options offered in suburban America, and the jobs seem to be following.

For Example …

Since 2010, Bayonne, New Jersey, a city just across the Hudson River from Manhattan, experienced a population growth of 6.4%, while more than 6,000 apartments have either opened or are under construction. According to a New York Times article, “as apartments rise in Bayonne, new businesses are appearing on Broadway, a three-and-a-half-mile commercial strip lined with vintage bakeries, cigar shops and newsstands that often appear unchanged from the 1950s.” In addition, Costco and Starbucks are opening their first stores in Bayonne, and a ferry that will bring residents to Manhattan is set to open in January.

Even Austin, a city that today is synonymous with jobs and growth, started with a “people first, jobs follow” movement. It has consistently been named one of the fastest-growing cities in the country, experiencing a 3% population growth since 2010, the same year that Facebook opened its Austin office with only seven employees. Just this month, Apple announced that it will be expanding its Austin operations, including a $1 billion campus expansion in North Austin. According to Apple’s press release, its newest campus will be located less than a mile away from their existing facilities — in fact, “the 133-acre campus will initially accommodate 5,000 additional employees, with the capacity to grow to 15,000, and is expected to make Apple the largest private employer in Austin.”

This is a growing trend in many upcoming cities across the country, many of which we have identified as strong investment opportunities within the workforce housing space.

As companies continue opening offices in secondary markets throughout the country, housing affordability will once again become a problem, as jobs follow people and in turn, people follow jobs. At Castle Lanterra Properties, we look for sustained job and income growth, as well as strong infrastructure and inadequate supply of high-quality rental properties, before deciding whether or not to acquire a workforce housing property that meets the needs of a growing workforce that is increasingly getting priced out of big cities.

A Case For Workforce Housing

It seems that the enthusiasm of a return to city living was short-lived or at best has stalled. As middle-income residents are finding it difficult to keep up with the rising cost of city living, good workforce housing in suburban areas will be the solution. It’s important for developers and property owners to recognize this and buy into the markets while they’re still affordable so they can provide quality housing to a workforce that so desperately needs it.


Founded in 1997, the Texas Affiliation of Affordable Housing Providers (TAAHP) is a non-profit trade association serving as the primary advocate and leading resource for the affordable housing industry in Texas. Our vision is to inspire and engage our members and stakeholders to end the affordable housing crisis in Texas.

Contact Us

221 E. 9th Street, Suite 408
Austin, TX 78701

TAAHP

TAAHP

Phone: 512-476-9901 | Email: info@taahp.org

Share This