Upper/Middle-Class Urban Home Ownership
Support (or refute) a hypothesis that the upper/middle classes are abandoning cities in favor of moving to more rural areas, by looking at what is happening with residential real estate in the top 5 cities of the US and Canada. This hypothesis will be used in an industry outlook for residential real estate for properties costing over $500,000-$2.5m.
- In general, migration in the US tends to follow certain patterns. Younger people move from rural to urban areas and people move from the Northeast and Midwest to the South and West. The overall trend is for the country to urbanize, which has a trend that has been going on since the 1900s.
- In 2018, the median household income in the US was $61,937. In the top richest cities of the US, however, that average is drastically different.
- The top ten richest cities in the US and their respective average household incomes are Atherton, CA ($450,696), Scarsdale, NY ($417,335), Cherry Hills Village, CO ($394,259), Los Altos Hills, CA ($386,174), Hillsborough, CA ($373,128), Short Hills, NJ ($367,491), Highland Park, TX ($358,994), Darien, CT ($341,090), Bronxville, NY ($340,448) and Glencoe, IL ($339,883).
- The average home price in Atherton, California is $5.95m and that has increased by 85.9% over the past year, showing that demand continues to be very strong. In comparison, the average home price in Glencoe, Illinois is $901,000 and it's decreased slightly over the past year.
- When looking at the top 100, certain patterns emerge. These cities tend to be close to a city center (ex. Atherton is close to San Francisco, Scarsdale to New York, and Cherry Hills Village to Denver), are usually close to high-profile companies like Google, and are supported by quality school systems.
- They also tend to be clustered together. 37 of the richest 100 cities are located in only 6 counties.
- Another way to define "top cities" is in terms of their ranking as "best places to live". This methodology might include important criteria for the project, including net migration and desirability (e.g. as measures of how attractive it is for people to move there). In the ranking by the U.S. News & World Report in 2019, the top ten places to live in the US were Austin, Texas; Denver, Colorado; Colorado Springs, Colorado; Fayetteville, Arkansas; Des Moines, Iowa; Minneapolis-St. Paul, Minnesota; San Francisco, California; Portland, Oregon; Seattle, Washington; and Raleigh, Durham, North Carolina.
- In general, the trend in Canada has been to urbanize but in a specific way- to grow faster on the fringes (move to suburbs) despite government efforts to encourage more density.
- The top ten richest cities in Canada and the respective average household net worths in those areas are West Vancouver in British Columbia ($3,363,535), Westmount in Quebec ($2,758,455), Rocky View County in Alberta ($2,519,049), King in Ontario ($2,108,458), Mont-Royal in Quebec ($1,954,818), Whitchurch-Stouffville in Ontario ($1,820,184), Oak Bay in British Columbia ($1,747,869), Foothills No. 31 in Alberta ($1,737,674), North Saanich in British Columbia ($1,532,000), and North Vancouver in British Columbia ($1,507,548).
- In Canada, property values are a big driver of a household's net worth. For example, the average worth of someone living in West Vancouver would have quadruple the wealth of someone living in Burlington, Ontario, despite making a similar income.
- If their wealth is tied to the land, homeowners in these top cities in Canada might be hesitant to move away.
- However, similar to what the team found for the US, smaller communities on the periphery of urban centers might be appealing. In Central Okanagan, director of economic development Corie Griffiths says population from urban centers Vancouver and the Lower Mainland now make up 15-20% of her region's population, up from 8-10% just three years ago. She says that this is a pattern that they see all over Canada and the US, where small towns are growing thanks to the housing crunch in popular cities. In Toronto, the average family would have to save for more than 8 years to buy a house.
- Out of a study on the best communities in Canada, more than 3/5s of the top 50 have a population below 40,000. However, they aren't "rural" in the way one might imagine- they have received the recognition because of their high incomes, a growing population and access to strong regional economies. The bigger city life, for work or entertainment, is also accessible since the winners were all within driving distance of a bigger population center or were hubs themselves. They balance the amenities of a suburb, the professional opportunities of a city, and access to nature. The full list can be found here.
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