Market Street in San Francisco between Sixth and 10th Streets, shown in 2016, was gentrifying as prominent tech companies opened new offices.
Policy makers and advocates for low-income housing often discuss fears that rising home prices are pushing lower- and moderate-income residents away from more desirable neighborhoods toward less prime ones with much longer commutes.
But Mr. Romem’s analysis of U.S. Census data shows that expensive American metros are losing lower- and middle-income families who help power sectors of the economy such as restaurants and hotels and public services like schools and police departments, not just to the suburbs but to completely different metropolitan areas.
“Essentially you have people who are higher income, replacing people who are lower income,” Mr. Romem said. “You see incomes rising and it’s not [just] because the economy is getting better. It’s because people are leaving.”
Newcomers to San Francisco make more than those leaving, with the difference skyrocketing over the lastdecade.
The trend is most pronounced in the San Francisco area, where home prices have risen 87% since 2010, according to the S&P CoreLogic Case-Shiller indices, and regulations around adding new housing stock are almost impossibly tight. Migrants to San Francisco and Silicon Valley earned nearly $20,000 a year more than those who left in 2016. Moreover, that gap has grown significantly over time as home prices in the region have risen. In 2010, households moving to San Francisco and Silicon Valley earned only about $8,000 more than those moving to it.
Other expensive cities, such as New York, Los Angeles and Seattle, see a similar trend of people leaving earning much less than those arriving. While the data can be volatile from year to year, in a number of cases the gap between the incomes of those coming and those leaving is also widening as the affordability crunch has worsened in most places.
In Los Angeles, the gap between the incomes of those moving to the area and those leaving it was $7,600 in 2016, up from just over $5,400 in 2010. In the Seattle metro, people arriving earned $6,100 less than those leaving in 2010, while today they earn they earn $11,400 more, according to Mr. Romem’s data.
Many former industrial hubs, such as Detroit, St. Louis, Cleveland and Philadelphia, are seeing the opposite trend. Those arriving on average actually make less than those who are leaving, suggesting more affluent households are seeking opportunities in more economically vibrant metros.
In-migrants also tend to have more earners per household in expensive places than out-migrants, suggesting not only that they are more likely to be dual-income households but also that they may be more likely to move in with roommates when they arrive.
Migrants to expensive cities are also younger, more likely to be renters and less likely to have children than those leaving them, according to Mr. Romem’s research.
Some economists argue the shift is not necessarily bad, as back-office jobs that don’t pay as well migrate to places where it is less expensive for people to live. But Mr. Romem notes that there are some jobs, such as service workers and public sector employees, that cities still need to stay local.
Moreover, he said there is opportunity lost if some of the country’s most economically productive cities are pushing out or turning away residents because of high housing prices.
“If people don’t live in the most productive coastal cities and end up living somewhere else, they’re not going to be producing the same stuff. There’s something lost there,” he said.
San Francisco Has a People Problem (March 22)
San Francisco Edges Out Washington to Become the Highest-Income Big U.S. Metro Area (Sept. 14, 2017)