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The Real Source of America's Urban Revival

February 24,2016

Millennials, housing costs, and shorter commutes are the usual explanations. But a careful new study points to another reason young college grads returned downtown in the 2000s.

Something strange happened in U.S. cities circa 2000: people started to move downtown. Not all people. If you look at the top 100 metro areas between 2000 and 2010, only two downtowns grew faster than their outlying suburbs in terms of total population. Two. But among young college graduates—a key indicator of an area’s growth potential, in the eyes of urban economists—moving downtown became more the rule than the exception.

From 2000 to 2010, more college-educated professionals aged 25 to 34 moved downtown than to the suburbs in 39 of the 50 largest U.S. metros. For 35-to-44-year-olds, the same held true in 28 of the 50 largest metros. This revival was true in the places you might expect, like New York City or San Francisco, and in places you might not, like Cleveland. It was true despite historical trend lines showing that, for the better part of a century, the wealthy typically moved one way when it came to cities: out of them.

“This is a huge reversal from decades of suburbanization of college graduates,” says urban economics scholar Victor Couture of UC-Berkeley. “Most large American cities experienced something like this rebound between 2000 to 2010. Over the last decade, broadly speaking.”

That insight won’t surprise CityLab readers, but the precise reasons for it continue to be studied and debated in light of the equitable housing and development challenges facing downtowns today. Couture and Jessie Handbury of the University of Pennsylvania think they’ve settled on an explanation in a new working paper that tracks America’s urban revival as meticulously as any analysis to date. And it’s not one of the usual suspects.

New living habits of Millennials and Baby Boomers, delays in starting a family, a tougher home-buying market, a hatred of long commutes—those social factors have all altered cities in recent years. But Couture and Handbury pin the return of downtown on a new fondness for service amenities: music venues, theaters, bars, gyms, and the like. Not the growth of these things but a fresh taste for living near them, a broad cultural shift that could make urban revival more durable.

“If this revival comes from a change in preference, then it could be a long-lasting phenomenon,” says Couture. “We have ruled out various explanations based on temporary trends.”

The preferences now favor downtown

To conduct their analysis, Couture and Handbury loaded up on tract-level population data from the 2000 census and the 2008-2012 American Community Survey. Then they piled on stats about job location, home prices, household formation, crime, and service amenities. The last tracked local availability of and proximity to 11 types of retail and cultural establishments—rolling these metrics into a “consumption amenities index.”

Of all these factors, service amenities seemed to play the key role in explaining urban revival, at least as defined by the return of the college educated to downtown areas. (More on why the other variables failed to explain residential trends in the next section.) Over time, young professionals chose to live in areas where there had been higher densities of amenities in 2000, as well as in places that experienced growth in such amenities during the next decade.

Furthermore, the researchers believe that first trend—the initial density of amenities—was the bigger instrument of revival. If young people merely flocked to places adding amenities from 2000 to 2010, they would have gone to the suburbs in greater numbers, since the suburbs actually experienced more amenity growth than downtowns did at that time. The fact that they went downtown, which had greater initial amenity densities in 2000, suggests to Couture that they’d developed a new preference for living near bars, restaurants, theaters, and the like.

“So what it seems is it’s not that the environment has changed in a way that favors downtown,” he says. “It’s that the preferences of people have changed in ways that favor the downtown—in particular the preferences for these highly urbanized amenities, like in entertainment services.” Couture acknowledges that the two trends aren’t mutually exclusive; more preference for amenities may lead to more growth in amenities for an area over time.

Just why young college-educated professionals might prefer to live near consumption amenities more than they have in the past is tougher to explain. The researchers are looking into several possibilities: that the urban revivalists have more disposal income, that the rise of digital location-based technology makes service amenities more valuable, and that the quality of amenities is higher in modern downtowns. Testing these ideas will be a challenge.

“Maybe Avenue Q is funnier than The Lion King,” says Couture, “but it’s hard to measure.”

Jobs and snake people can’t explain it

There are obviously many reasons why a 25-to-44-year-old college grad might have moved downtown between 2000 and 2010. Couture and Handbury aren’t saying that a new demand for proximity to bars and such was the only factor—just that it offered the best statistical fit with residential patterns during that period. The other explanations they considered, many offered by the popular media or previous research, proved relatively less powerful than the lure of amenities.

Job centralization. One common claim for downtown revival, with strong evidence and logic to back it, holds that a growing hatred of long commutes has led people to move closer to their jobs. But Couture and Handbury doubt that’s the leading draw for college grads. If it were, there’d be a strong link between living near a central business area and working there; in fact, data on high-income professionals (age-based data weren’t available for this metric) in the 10 largest metros show they’re living downtown no matter where they work.

There’s no single reason, of course, but a hatred of long commutes might be a big one.

Take San Francisco as the most obvious example. One of the reasons for the city’s affordable housing crisis is that high-income young college grads in the tech industry are moving downtown but reverse commuting out to Silicon Valley. That suggests many of them are living downtown for reasons that have little or nothing to do with job location—consumption amenities among them.

Baby Boomers or Millennials. Despite popular reports, the researchers didn’t find much evidence that Baby Boomers or Millennials were leading the revival movement, at least during the critical 2000-to-2010 years. The 45-to-64-year-old population, essentially Baby Boomers, was still suburbanizing during this time, with downtown college-educated growth outpacing suburban growth in just 21 of the top 100 U.S. metros. Millennials, the 18-to-24 group, were showing signs of heading downtown, but the cohort was too small to be a key force.

Contrast that with the city-bound movements of college grads age 25 to 34 and 35 to 44 during this period. In the 50 largest U.S. metros, populations for both of these age groups grew three times faster downtown than in the suburbs. For the 25-to-34 group, in particular, only two of the biggest 25 metros saw faster growth in the suburbs: Riverside, California, which lacks a true downtown, and Detroit, which is Detroit.

Other explanations

Families, housing, and crime—evidence for these explanations also didn’t quite cut it for Couture and Handbury. In brief:

The impact of household formation—singles living alone, or couples waiting to have kids—was a mixed bag. That case makes sense for the younger cohort, 25 to 34, which from 2000 to 2010 was living solo or as a non-married couple more than the national average. But the same couldn’t be said for the 35 to 44 group, which was actually more likely than average to have young children—a demographic that skews suburban.

Mortgage lending could also play a role. If homes are harder to purchase, people might move downtown and rent instead. And indeed, first-time home-buying has become more difficult since the housing crisis. But the timing is off, says Couture. The revival occurred from 2000 to 2010, and the Great Recession came toward the tail end. Additionally, he says, home-ownership rates among young college grads have actually increased during this full period.

As for crime, the researchers regard their analysis here as inconclusive. Urban revival and a decline in crime rates did coincide in large U.S. metros. But it’s hard to know what caused what: a safer city would no doubt appeal to college grads, but then again an influx of college grads would likely make a city safer. “All we can say is if we look at areas already safe in 2000, then this is not a precise predictor of urban revival,” says Couture, who’s hoping for better data.

Couture stresses that the research remains in a preliminary form (it hasn’t yet been peer-reviewed) and that he and Handbury are doing additional tests using newer data. He also acknowledges that the type of modeling and analysis performed for the work, while sophisticated, isn’t perfect. And again, even as the study submits proximity to service amenities as the main reason for urban revival, it doesn’t suggest other factors didn’t play a part.

Still, Couture believes the return of downtown America is critical to study and discuss, qualifiers and all. “We care about the implications of this trend,” he says. “As an urban policymaker, as an interested citizen, it’s something that has a lot of public interest.”