Of the urban residents fleeing for suburbs, how many of them are living in dreaded McMansions?

McMansions have attracted the criticism of many (examples here and here). However, what if some of the wealthy urban dwellers fleeing COVID-19 hotspots end up in a suburban McMansion?

Wealthy New Yorkers, who once looked down on anyone quitting the vibrant city for a McMansion and manicured lawn, are doing exactly that.

Egads! The horror! Even worse, what if those urbanites in suburban McMansions decide to stay for a while and come to enjoy parts of their new suburban lives?

high angle shot of suburban neighborhood

Photo by David McBee on Pexels.com

It is easy here to connect the critiques of McMansions to the broader concerns about suburbs expressed by numerous critics since the early twentieth century. McMansions have multiple issues of their own but suburbs are connected to conformity, ticky-tacky houses, provincialness, middle-class lifestyles, unnecessary consumption, and more. For some urbanites, the suburbs represent the opposite of dynamic, diverse, cosmopolitan, and engaging cities or urban neighborhoods.

Another way to think about this is to consider how much of city life city-dwellers pre-COVID-19 might bring to suburbs. Are the suburbs such a totalizing place that any vestiges of life in New York City disappear? And vice versa: if these residents end up back in New York City, will they bring suburban expectations and values to the city? How many McMansions are there in s the numerous single-family home neighborhoods in many American cities?

The same writer thinks the move to the suburbs is relatively short-lived as the city has many advantages:

The old trade-offs involved in moving to the exurbs or suburbs aren’t going to disappear overnight. France’s Gilets Jaunes stormed Paris precisely to protest the decaying quality of life outside cities. The typical U.S. city resident lives near almost three times as many jobs as a typical suburbanite, according to the Brookings Institution. Those jobs pay better, too, with average wages per worker in urban areas some 46% higher than lower-density suburbs. So it’s likely that making the move will mean trading subway rides for car commutes. And when journeys get longer, there’s generally less inclination to travel to enjoy the fun stuff — the so-called “friction of distance.”

And make no mistake, the fun stuff will be around as long as cities can keep attracting people, money and ideas. In the 1980s and 1990s, metropolises like London and New York reversed decades of decline by focusing on services such as finance and leisure rather than factories. While it’s true that excessive property speculation turned them into playgrounds for the rich, threatening their draw as diverse and creative melting pots, things could change for the better. The next reinvention, according to urbanism expert Laurent Chalard, will be about making cities less dense and more livable: More cycling, fewer cars, bigger homes. Outside the city, life may end up less green and less convenient.

Given the long-term preferences many Americans have for suburban life, this may continue to be a hard sell.

The budget gap facing Chicago area suburbs due to COVID-19

An online forum with House leaders provided details on how suburban budgets in the Chicago area are affected by COVID-19:

Not only are sales taxes plunging but costs of preventing the respiratory disease are mounting, suburban leaders explained to House Majority Leader Steny Hoyer at an online forum hosted by U.S. Rep. Sean Casten Monday.

Glen Ellyn expects a 20% to 25% reduction in revenue over the next three to six months in the general fund, half of which goes to the police department, Village President Diane McGinley said…

Algonquin Village President John Schmitt said not only is the village shelling out for items like face masks but so far there’s been a 26% reduction in sales taxes revenues…

He noted Hanover Park is facing about $242,000 in COVID-19 expenses and a drop of almost $5.6 million in taxes.

If a retailer or business cannot open or sell at the same level as prior to the pandemic, this affects all sorts of outcomes. As noted above, communities have limited numbers of ways to fill this budget gap. They can look to governments above them – states, the federal government – but that puts their fate in the hands of others and that money may not come quickly or in sufficient amounts. In the short-term, this likely means putting off projects. Longer-term, it could mean some hard decisions about services and local amenities that suburbanites enjoy or think are essential.

The tax revenues might just be the tip of the iceberg; if retailers have to close (already an issue from urban shopping districts to shopping malls), this puts pressure on landlords as well as on communities to fill vacant space (already an issue in suburban communities whether filling big box locations or office parks) both to generate revenue and avoid the appearance of economic loss or blight. Local jobs are affected.

It will be interesting to see if these budget issues widen the gap between suburbs with a lot and those with less. There is already a bifurcated suburban landscape: some communities really struggling and some with a lot of resources, amenities, and status (and many somewhere in between). Those who have more can likely weather this storm better than the suburbs already struggling.

Data from Washington, D.C. does not suggest people are fleeing for the suburbs

A new analysis from Brookings Institution suggests real estate sales are down in both Washington, D.C. and its suburbs during COVID-19:

In the Washington, D.C. metro area, there’s no sign so far that residents in the urban core are more anxious to sell their condos and rowhouses than suburbanites are to ditch their McMansions. Home sales for the entire metro area dropped in March 2020, very similar to the pattern in the District. (Washington, D.C. accounts for less than 15% of the metro area’s population and home sales.)

Breaking out the year-over-year change in home sales for each local jurisdiction in the metro area shows similar patterns in the urban core (darkest gray), inner suburbs (medium gray), and exurban jurisdictions (light gray).

4

Other items of note:

  1. Prices have not dropped (similar to elsewhere).
  2. As I noted a few posts ago:

In the U.S., large cities have been hit earliest—and hardest—by the coronavirus pandemic, spawning a cottage industry of speculation over whether city-dwellers will flee to low-density suburbs.

Without seeing the data from a lot of major metropolitan areas in the United States, it is hard at this point to conclude much of anything. Perhaps New York City is an outlier where people want to go to the suburbs to escape all of its density. Are transportation patterns in Washington D.C. where a majority of residents drive daily more like Los Angeles than New York City?

Analysis from Moody Analytics suggested Washington D.C. is one of the metro areas more likely to rebound from COVID-19. Would such a recovery help the city and region move toward being the true second city in the United States?

Maybe Washington D.C. is another outlier in all of the possible data. That leads to another question that often comes up when talking about urban theory: what is the modal American city, particularly in the time of COVID-19?

Welcome in Amazon, look for other businesses to follow?

Amazon will soon open a new facility in Palatine, Illinois and get a tax break to do so. That is normal. This other part caught my attention: the suburb hopes Amazon’s arrival helps spur more development.

Amazon will move into a warehouse and distribution facility under construction off Hicks Road south of Northwest Highway, and Palatine officials hope the online retail giant’s arrival sparks more development in that industrial area.

“This is a good bit of news for us, for sure,” Mayor Jim Schwantz said Monday. “It’s the right kind of use for that area. It’s a light draw on our services. It’s not going to take a ton of water. It’s not going to take police or fire calls. We know Hicks Road is built to be able to handle the additional traffic.”

Lots of communities want Amazon to move in. They bring jobs, they fill warehouses, and they bring a big name. Just remember all the cities that put together plans to try to allure Amazon HQ#2.

But, this is another dimension of having a successful company move into your community: it could lead to further growth. Having Amazon puts you on the map. Companies could choose from dozens of warehouse or manufacturing locations in the Chicago region. But, if Amazon is already there, this may attract other firms. Success begets success, growth leads to more growth.

Another example, perhaps two decades in the making: suburbs and neighborhoods all wanted a Starbucks. Not only would this bring in sales tax revenue and more shoppers. It put a place on the map. It suggested the place was cool enough, was up and coming or had an established set of well-off residents. Starbucks could pave the way for other similar businesses that would bring in or provide for a certain crowd.

Or, think about headquarters. These facilities may not have that many employees or may just be an office building but being home to headquarters, as opposed to branches or locations, is something special. Headquarters attract headquarters. They signal something.

A typical Amazon facility is not going to be flashy. It is not going to attract many visitors or shoppers. However, it will add to a community’s tax base, provide jobs, and help the community say they are home to one of the most important companies in America. That Amazon distribution center may be the start to something greater.

Another claim that COVID-19 will push people to the suburbs

I have seen a version of this argument several times already and here is the most recent one: according to the New York Times, more New Yorkers are moving to the suburbs.

Cooped up and concerned about the post-Covid future, renters and owners are making moves to leave the city, not for short-term stays in weekend houses, as was common when the pandemic first arrived, but more permanently in the suburbs.

While some of the fresh transplants are accelerating plans that had been simmering on the back burner, others are doing what once seemed unthinkable, opting for a split-level on a cul-de-sac after decades of apartment living. Others seem to have acquired a taste for country life after sheltering with parents in places with big lawns or in log cabins.

But there’s also a sense that in today’s era of social distancing, one-person-at-a-time elevator rides to get home and looping routes to avoid passers-by on city streets has fundamentally changed New York City…

For starters, people seem to be packing their bags. Between March 15 and April 28, moves from New York to Connecticut increased 74 percent over the period a year ago, according to FlatRate Moving. Moves to New Jersey saw a 38 percent jump, while Long Island was up 48 percent.

Also, suburban towns not really known for their rental stock have had huge spikes in activity, which is being driven in part by escaping New Yorkers, according to brokers in those areas.

There is both a short-term and long-term view of this possible trend:

1. COVID-19 might lead to a sudden change in New York City and possibly other locations that are very dense (which does not necessarily apply to Los Angeles). For example, one report suggests denser cities and places with lower levels of educational attainment will struggle to recover.

2. The population of the big three cities – New York, Los Angeles, and Chicago – had already plateaued or started decreasing. COVID-19 may just be accelerating what was already happening.

Only time will tell which is more correct. In moments like these, it is easy to suggest cities will decline or people will have long-term fears – and I have seen these pieces as well – but Americans have preferred suburbs for decades. In the meantime, it is probably safe to say that life in cities has changed. What is often attractive in cities is the street life, the culture, the opportunities all within a short distance. COVID-19 is a unique problem in that it limits social interaction, the lifeblood of numerous city neighborhoods and gathering places. In contrast, the suburbs prize private spaces like homes and privilege driving. When people need to isolate, they are already used to it to some degree in suburbs.

A third option might end up being closer to reality: New York City, with all of its COVID-19 cases and its unique features, might suffer more from the pandemic than anywhere else in the United States. At the same time, this leading city will still have a lot going for it after COVID-19 fades and it will continue to be attractive to many.

Changed suburban spending because of COVID-19, Naperville edition

While most public attention with COVID-19 has focused on big cities and countries, numerous suburbs will deal with the effects of the pandemic as well. Here is how Naperville, a large and well-off suburb, is planning to tackle a budget gap:

The city of Naperville is shaving nearly $25 million off its 2020 budget in the wake of the economic downturn caused by the coronavirus pandemic…

City Manager Doug Krieger said some of the projects were selected to be postponed because they’re considered “nice-to-haves” and aren’t expected to cost significantly more to be completed in future years. One major project, a $2.6 million plan to improve downtown streetscapes, was included on the list for deferment because “the downtown merchants did not want to proceed” with it in light of the pandemic, he said.

The moves will help the city offset anticipated declines in revenue sources — such as sales tax, food and beverage tax and motor fuel tax — as residents and businesses continue to follow the stay-at-home order…

Other work that will not take place this year includes $9 million in water meter-reading technology upgrades, a $7 million road widening project on North Aurora Road and $1.1 million of work toward a park at 430 S. Washington St. to be built in conjunction with North Central College, as well as smaller projects such as LED lighting conversion, tree planting, electric vehicle charging stations, flooring replacements and conference room IT and electric upgrades.

Suburbs and other municipalities can generate tax revenue through several sources (as noted above). Property taxes are affected by property values, which appear at this point appear to be holding firm during COVID-19. Sales taxes are generated by local businesses; this will certainly be down in communities (though the decline of retailers was already an issue). Food and beverage taxes will be down. And the number of people buying gasoline – feeding into the motor fuel tax – is down (and projections for the state’s funding through this suggest a big dip). In Illinois, we are near a third month of reduced business and social activity and this will make a big dent in municipal finances.

At the same time, based on the descriptions here, it sounds like an average resident of Naperville would not even notice that these improvements are not addressed this year. Of course, it could create a backlog for future years – pushing projects down the road means other planned projects might be delayed later – but the focus is on helping to address the current issues.

Naperville may be an unusual case compared to many other suburbs. It is a big community with a lot of successful businesses. The local government prides itself on being well-run and stable. It is not clear how long Naperville could continue to work through budget shortfalls but it is likely better prepared for this than many places.

This means that many municipalities could be facing tough questions in the months ahead about local projects and local funding. If the federal government and states are struggling with missed revenues, this will certainly affect municipalities who have to address local budget issues.

Fitting COVID-19 into the cycles of American cities

Derek Thompson writes about how COVID-19’s effect on retail and restaurants will affect American cities:

The song of American urbanization plays on an accordion. Americans compressed themselves into urban areas in the early 20th century. By mid-century, many white families were fanning out into the suburbs. Then, in the early 21st century, young people rushed back into downtown areas. But in the past few years, American cities have begun to exhale many residents, who have moved to smaller metros and southern suburbs. As with so many other trends, the pandemic will accelerate that exodus. Empty storefronts will beget empty apartments on the floors above them.

The American cities waiting on the other side of this crisis will not be the same. They will be “safer” in almost every respect—healthier, blander, and more boring, with fewer tourists, less exciting food, and a desiccated nightlife. The urban obsession with well-being will extend from cycling and salads to mask design and social distancing. Many thousands of young people who might have giddily flocked to the most expensive downtown areas may assess the collapse in living standards and amenities and decide it’s not worth it. Census figures will show that the urban exodus went into hyperdrive in the COVID years. There will be headlines exclaiming the decline of the American city or, more punchy, “Americans to New York: ‘Drop Dead.’”

Then something interesting will happen. The accordion will constrict again and American cities will have a renaissance of affordability…

But the near death of the American city will also be its rebirth. When rents fall, mom-and-pop stores will rise again—America will need them. Immigrants will return in full force when a sensible administration recognizes that America needs them, too. Cheaper empty spaces will be incubators for stores that serve up ancient pleasures, like coffee and books, and novel combinations of health tech, fitness, and apparel. Eccentric chefs will return, and Americans will remember, if they ever forgot, the sacred joys of a private plate in a place that buzzes with strangers. From the ashes, something new will grow, and something better, too, if we build it right.

Several thoughts in response:

1. Thompson hints at one of the vital pieces that makes cities work: the density of people and activity. Restaurants and retailers are not just functional entities that provide jobs and revenue; they bring in extra people who want to visit, eat, browse, be around other people who are doing similar things. The kinds of everyday activity that make urban neighborhoods unique and attractive are difficult to maintain during COVID-19 when restrictions limit contact and social interaction.

2. After just reading The Death and Life of Great American Cities with one of my classes, I wonder: what would Jane Jacobs do in times of global pandemics?

3. Thompson describes populations moving in and out of American cities as conditions change. From a broader perspective, I am not sure I would agree with the accordion example: the longer-term trend in the United States since the early 1900s has been toward suburban growth and development. The percent of Americans living in cities has stayed relatively stable since the beginning of the postwar era while government policy, cultural ideology, and population shifts have swelled suburban populations. If American cities can gain and lose residents, it is a relatively small accordion compared to the tremendous suburban growth over the last century.

4. A problem with predicting future urban trends is that the patterns of the past may not happen again in the future. COVID-19 is the sort of event that is difficult to know the effects of, particularly years down the road. Will life return to normal or will the effects of a significant economic shutdown and shelter-in-place for many people change future behaviors? We do not know. At the same time, I do not think Thompson’s predictions are unreasonable. How exactly the affordability of land plays out could be an arduous process; land that was relatively overvalued before COVID-19 may not quickly become affordable and it may take time to clear significant debts or mortgages for numerous urban properties.