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Researchers at the federal mortgage giant Fannie Mae just came out with a study that should be required reading for all New York mayoral candidates.
The dryly titled “housing insights” paper, “Covid-19 Led First-Time Homebuyers to Move Away from Highly Dense City Centers,” released Tuesday, includes a bombshell for Gotham: New York, along with San Francisco, are far and away the two national leaders of an exodus from high-cost big cities to “low-cost cheaper areas of the country.”
What’s more, say Fannie’s economists, these younger households may not be coming back.
Here’s why. The one-time Gotham renters are not just moving out — they’re buying homes elsewhere. The combination of the pandemic and ultra-low interest rates has created a wave of former city renters choosing to purchase houses.
One-time renters in the New York as well as in San Francisco areas became first-time buyers at a higher rate than the national percentage. In fact, New York and San Francisco stood out for making up the largest portion of all moves from high- to low-density areas. There’s good reason to think the moves are permanent.
Working from home, says Fannie, is a game-changer. So is fear of riding mass transit. New buyers are moving “from ZIP codes where the primary means of commuting is not driving to those where driving is the norm.”
As both local and state elected officials consider boosting taxes yet again, they should pay attention to the fact that New Yorkers are not just moving out of the city — they’re leaving the metro area. Almost 20 percent of the new buyers were leaving the tri-state.
The only “good” news here is that even more of San Francisco’s residents — as much as 43 percent, this past November — are voting with their feet to leave high rents and homeless encampments behind, keeping Gotham from having the nation’s most troubling record. Yet taken together, New York and San Francisco account for most of the nation’s spike in moves away from cities.
The Fannie Mae paper, in an understated, academic way, makes clear this change in preference could be permanent. “First-time buyers may have chosen to accelerate their moving timelines, from renting to owning, as a result of the pandemic.”
What’s more, the “pandemic experience of working in a lower housing cost area likely appealed to many workers, and it may be a lifestyle benefit they plan to maintain, thereby attenuating any potential ‘return to the cities’ phenomenon.”
This is no small matter for those who love New York and root for its rebirth. Like any healthy neighborhood, urban or suburban, continued vitality requires what housing experts call replacement demand. When someone moves out, the neighborhood needs someone to move in — lest property values and property-tax revenue collapse. (See: The Bronx, South, 1970-1980.)
Fannie Mae zeroes in on what it will take for New York, even including Manhattan, to avoid that fate. “To the extent that large metro areas maintain the amenity values that drew people to them in the first place, we may expect people to flock back to these areas once the pandemic subsides.”
That’s a pretty big “if.” And it will require more than reopening Broadway for tourists.
“Amenity values” must include a city where random street attacks are not the norm, where subways are not only clean but safe, where the gunplay of gang members doesn’t kill bystanders walking home from work.
It means clearing the street of the “homeless” — and not just crowding them into shelters. For good measure, one might add property-tax reform, so residential buyers don’t face sticker shock.
We must face the fact that New York, so long a magnet, has reversed its polarity: It’s now pushing people away, instead of attracting them. It finds itself in a competition with areas it once ribbed as “flyover” country. And, right now, New York City is losing.
Howard Husock is an adjunct scholar at the American Enterprise Institute and a contributing editor of City Journal.