Are the High Fliers Pricing Themselves out of the Market: The Impact of Housing Cost on Domestic Migration Rates in U.S. Metropolitan Areas
Urban Affairs Association MeetingsChicago, IllinoisMarch 4-7, 2009
Barry BluestoneNortheastern University
Mary Huff StevensonUniversity of Massachusetts Boston
Russell WilliamsWheaton College
Boston
Monthly Housing $1,266Monthly Food $ 587Monthly Child Care $1,298Monthly Transportation $ 321Monthly Health Care $ 592Monthly Other Necessity $ 500Monthly Taxes $ 824Monthly Total $5,388
Annual Total $64,656
Raleigh-Durham-Chapel Hill
Monthly Housing $ 779
Monthly Food $ 587Monthly Child Care $ 866Monthly Transportation $ 358Monthly Health Care $ 368Monthly Other Necessity $
369Monthly Taxes $
350Monthly Total $3,677
Annual Total $44,124
A Tale of Two Cities:The Cost of Living Challenge
Source: Economic Policy Institute, “Family Budget Calculator, 2005”
Boston vs. RaleighNet Domestic Migration (2000-2006)
Employment Growth(2000-2006)
Boston - 6.0 % -2.0 %
Raleigh +17.8 % +11.9 %
Net Domestic Migration by Housing Costs Decile (2000-2006)
0.38%
-0.21%
0.48%
2.95%
2.01%
3.56%
4.94% 5.07%
5.66%
-1%
0%
1%
2%
3%
4%
5%
6%
1st Decile 2nd Decile 3rd Decile 4th Decile 5th Decile 6th Decile 7th Decile 8th Decile 9th Decile
Housing Costs – Top 10 MSAs1. Honolulu, HI2. San Francisco-Oakland-Fremont, CA3. Santa Cruz-Watsonville, CA4. Oxnard-Thousand Oaks-Ventura, CA5. San Diego-Carlsbad-San Marcos, CA6. Boston-Cambridge-Quincy, MA-NH7. Santa Barbara-Santa Maria-Goleta, CA8. Washington-Arlington-Alexandria, DC-VA-MD-WV9. New York-Northern New Jersey-Long Island, NY-NJ-
PA10. Los Angeles-Long Beach-Santa Ana, CA
Net Domestic Migration Rates (2000-2006) by Housing Cost Decile
-0.21%
0.48%
2.95%
2.01%
3.56%
4.94% 5.07%
5.66%
-1.99%
0.38%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
1st Decile 2nd Decile 3rd Decile 4th Decile 5th Decile 6th Decile 7th Decile 8th Decile 9th Decile 10th Decile
A Similar Pattern for Employment Growth
Generally, employment has expanded faster in higher housing cost metro areas
But … not true in the most expensive MSAs
Employment Growth (2000-2006) by Housing Cost Decile
3.56%3.97%
5.65%5.30%
4.07%
5.54%
9.89%
8.96%
11.84%
0%
2%
4%
6%
8%
10%
12%
14%
1st Decile 2nd Decile 3rd Decile 4th Decile 5th Decile 6th Decile 7th Decile 8th Decile 9th Decile
Net Domestic Migration Regression
-.1651 + .000451 Monthly Housing Cost (4.78) - .00000028 Monthly Housing Cost Squared (5.48) + .3744 Employment Growth Rate (2000-2006) (13.69) - .0000994 Days Under 32 Degrees (1.77)
N = 347 Adjusted R-Sq = .444
Estimated vs. Actual Net Migration Rate from Regression #5
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
1st Decile 2ndDecile
3rdDecile
4thDecile
5thDecile
6thDecile
7thDecile
8thDecile
9thDecile
10thDecile
Boston
Actual Mean Est. Mean
Employment Growth Regression
-.2374 + .000591 Monthly Housing Cost (3.46) - .000000255 Monthly Housing Cost Squared (2.77) + .0015 Days Over 90 Degrees (9.13) - .000113 Violent Crime Rate (3.92)
N = 347 Adjusted R-Sq = .219
Net Migration Simulation Boston MSA
Actual Net Domestic Migration Rate: -6.0%
Estimated assuming 10% Lower Cost of Housing: -3.4%
43% decline in out-migration rate
Change in Net Domestic Migration Rate if +10% Employment Growth Rate: - 0.1%
A Change in Statistical Regime Up through the 9th Decile, in-migration and
employment growth contribute to higher housing cost as housing demand outstrips housing supply
But once you reach the top decile, the statistical regime abruptly changes
Now home costs drive migration and employment patterns … contributing to population and job loss.
Conclusion The highest cost metro areas, failing
in the recent past to build adequate housing stock to meet rising demand, are now pricing themselves out of the market for people and business investment