Over the past 15 years, Brooklyn went from being a place known for cheap real estate and long subway rides to a place where professionals jockey to find a decent two-bedroom for under $4,000 a month. Something similar can be said about a lot of other once-marginal neighborhoods in major U.S. cities like Washington, LA, and Boston, where gentrification has also spread fast.
Why has this happened? Well, as I wrote here
the other day, a big reason is that the number of affluent people has exploded in America since the late 1990s. Many, many more people are making a few hundred thousand dollars and up, and they all need someplace to live -- ideally not too far away from their lucrative jobs. So they push out in every direction in search of good housing stock. Falling crime rates and a new romance with urban life have been other key drivers here.
The result, though, is that many cities are becoming too expensive for anyone who's not making gobs of money. Even $200k doesn't go very far these days. Not when 1-bedroom condos start at half a million. And if you've got kids, forget it. These places are really tough for the non-rich.
This is hardly news. But here's a question: What can we actually do about it?
We can build affordable housing, but that can only get us so far, since a core problem is that there's often not much room for more housing in already congested areas, and anti-growth sentiments run strong in many places. So as long as market forces exert a fair degree of influence over a housing market with lots of demand and limited supply, the affluent will keep bidding up prices higher and higher.
A return of high urban crime rates would drive down prices, and disperse the demand out into the suburbs, but that's not a desirable solution. Meanwhile, steps to reduce income inequality probably won't make much of a difference, at least not when it comes to the overcrowding of opportunity cities. If higher taxes or lower wages knock the lawyer couple making $600,000 together down to $450,000, they're still going to beat out teachers and social workers in competition for Park Slope co-ops.
So here's another idea: New ways are needed to disburse opportunity more widely, geographically. Everybody is competing to live in the same cities because so many of the best jobs are there. It's a Catch-22 for professionals: To make good money these days, you usually need to live in an expensive place, with the result being kind of a wash. Yes, you can move to a cheaper part of the country, but you'll have less opportunity.
But what if that wasn't the case? What if there was more opportunity in cheaper places? New York State is a good example. Brooklyn may be murderously expensive, along with Westchester County. But you can buy a big Victorian two hours north in Kingston for $350,000. Alas, though, there's not a heck of a lot going on in Kingston. You see something similar in many places: overpriced opportunity cities and then, far out, cities that have been largely bypassed by the growth of recent times.
However, with the right economic strategy, that could change. And, again, New York is a good example: Kingston actually does have more going on than used to be the case a decade or so ago, as the Internet has made remote work more practical. Beacon is another upstate city showing lots of life. What's happening in these places is that more professionals who can work remotely are moving for the cheap housing and then creating a critical mass of creative talent that starts to generate its own economic activity.
You see the same thing happening nationally -- for example, the way that economic refugees from pricey California have juiced the economies in places like Austin, Portland, and Boise. Or all the former Bostonians who've moved up to Maine.
But none of it is particularly intentional, even at the state level. Policymakers in Albany aren't sitting around dreaming up ways to make Beacon a practical alternative to Brooklyn. But if they did -- say, with tax breaks, subsidized office space, business loans, high-speed broadband connections, and so on -- that could be a game changer.
Professional urban America is overcrowded. It's time to get serious about dispersing the talent.