America’s superstar cities – is NYC becoming a trustafarian resort-town?
In the wake of NYC Mayor Bloomberg declaring that New York’s staggering real-estate pricing makes it into a “luxury product,” not a “Wal-Mart,” Joel Kotkin has written a superb piece for the Wall Street Journal on the poor value for money to be had in the “superstar” cities of America, as compared to the fast-growing B-list cities like Phoenix.
I know what he means — I think of Europe’s B-list cities, like Florence, as having the best of all worlds: relatively cheap housing, lots of weird, experimental activity, cosmopolitanism, beauty and culture. Go to a superstar city like NYC or London and check out how similar all the restaurants, stores, and galleries are. When you need to make $[RIDICULOUS] per square foot every month, there’s not a lot of room for a crazy, experimental bookstore or a funky, marginal cafe. Compare that to cities like Melbourne, Montreal, Austin and many other “second cities” and you find a flourishing alternative culture.
The high-price trend is further exaggerated by the large concentrations of “trustafarians,” or those with large amounts of inherited capital, in these areas. Many of these people have multiple residences — in some Manhattan buildings as many of half of the owners are non-residents — but can still drive up prices. Together with top-end business types, they can create what Mr. Gyourko describes as “the Vailization” effect: that is, turning part of the city into something akin to a high-amenity resort area, a “scarce luxury good” for a relative few and those who must remain behind to service them…
Over the past decade college-educated workers — who once disproportionately migrated to the superstar cities — now appear to be tilting instead to more affordable, family-friendly places. Since 2000, Riverside, Phoenix, Charlotte, Las Vegas and Dallas all have been among the big net gainers with such migrants. In contrast New York, Boston, L.A. and even the Bay Area, a big winner in the 1990s, appear to have become among the highest net losers. The big outlier here, as in many things, is Washington, D.C., where an ever expanding federal government and its satellites continue to draw in ever more educated workers.