Outmigration of residents from high-cost “movie-set cities,” such as New York and Los Angeles, to lower-cost locales, such as Denver and Nashville, has generated ample media coverage, especially since the pandemic began. Covid-19 has certainly shaken up American cities. Before Covid, leaders in high-cost cities could assume residential fealty because workers and workplaces needed one another. Remote work has shattered that equation.
Still, long before Covid, people were leaving expensive coastal cities for more affordable and dynamic places. What’s new is greater public awareness of this trend, which has put leaders of high-profile cities on the hot seat and created openings for leaders of inland urban dynamos to innovate—and to attract more people and investment.
Would-be innovators would do well to examine the best pre-pandemic examples of urban dynamism: Austin, Texas, and Raleigh, North Carolina. Both cities are well-known among urbanists for their growing populations and dynamic economies. Less discussed, though, is how they maintain relative affordability amid such growth. They are the only two of America’s 52 major metro areas with over 1 million residents to rank in the top ten in population growth, economic growth, and lowest unaffordable-housing growth. (Phoenix gets an honorable mention, making the top 12 in all three categories.)
These cities should be understood as quintessential “opportunity cities”: metro areas offering good job prospects and a relatively affordable, pleasant quality of life. Economic dynamism and affordability drive people’s decisions to leave one city for another. Cities hoping to increase their share of America’s disenchanted migratory metro workers will need to learn how to provide them.
Opportunity cities were faring well even before Covid-19. Between 2014 and 2018, the five fastest-growing major metros by population percentage were Austin; Orlando, Florida; Raleigh; Las Vegas; and Dallas. Others in the top ten included Phoenix; Charlotte, North Carolina; and Jacksonville, Florida. By contrast, higher-cost New York, San Francisco, Los Angeles, and Chicago saw their growth decelerate or decline. Chicago’s growth rate was negative between 2014 and 2018 and the third worst among all major metros, while San Francisco grew at one-third of Austin’s rate, dropping from the top 25 to the bottom half of major metros.
Not all boomtowns manage growth the same. Austin and Raleigh—two of the three fastest-growing cities between 2010 and 2014—saw their housing grow more unaffordable at the third- and fifth-slowest rates, respectively, among major metros between 2014 and 2018. Between 2014 and 2018, Orlando and Las Vegas—both top-five cities in population growth—ranked 23rd- and 24th-slowest, respectively, on the housing list. Like Raleigh, Riverside, California, boasted a top-five rate of GDP growth and was among the top ten metros with the slowest unaffordable-housing growth. On the other hand, Seattle, also in the top five for GDP growth, was 22nd in housing affordability. Phoenix was not a top-five city in any of the three main categories, but it turned in a respectable showing in each.
What can we learn about the common traits of opportunity cities such as Austin, Raleigh, and Phoenix? They all happen to be state capitals with major research universities, but these are obviously not replicable attributes, and other state capitals with universities don’t perform as well. So other factors must be at play.
Opportunity cities seem to benefit from leadership in the private and public sectors that intentionally prioritizes both economic growth and maintaining an adequate housing supply. Austin and Raleigh famously score well on various measures of business culture and entrepreneurship, but they also ensure that housing costs don’t balloon as their economies and populations grow. For instance, 55 percent of residential land in Raleigh is zoned for single-family homes, compared with 94 percent in San Jose, 75 percent in Los Angeles, and 77 percent in Portland. These figures are no accident: they have to do with choices about how restrictive or flexible a city wants to be. According to a 2019 analysis and index of restrictive land-use and zoning restrictions, San Francisco, New York, and Los Angeles are among the five most highly regulated housing markets.
Every mayor and city council should seek to understand this dual commitment to affordability and growth. In the latest edition of the Milken Institute’s Best Performing Cities Index, which included affordable-housing measures alongside measures of growth and dynamism, Austin, Raleigh, and Phoenix placed in the top seven, compared with the index’s other largest cities. The growth-plus-affordability formula pays clear dividends. Both Austin and Raleigh rank in the top ten of the nation’s 100 largest cities in terms of immigrant homeownership. They also perform well on the American Enterprise Institute’s Tech Worker Index, which shows that the typical technology worker can afford 81 percent of homes in Raleigh and 71 percent in Austin, compared with just 12 percent of homes in San Jose and 21 percent in San Francisco.
Opportunity cities’ forms of governance may also help them manage growth and costs better than other cities. Austin, Raleigh, and Phoenix are council–manager cities: the majority of council members are elected from geographic districts, and mayors’ powers are limited relative to those of managers, who execute policy. Unlike mayor–council cities, such as New York or San Francisco, council–manager cities have been shown to be less likely to adopt symbolic or ideological policies. Shaping and executing practical policy is left to managers, which tends to make the city operate more efficiently.
Studies have shown that council–manager cities distribute the benefits of public policy more broadly and are more likely to adopt innovative solutions. Political competition can also buttress good governance. Austin, Raleigh, and Phoenix have had noticeably more political diversity in their mayoral offices and city councils the past 20 years than some of the more ideologically charged mayor–council cities, such as Chicago, Los Angeles, and New York.
As cities emerge from the pandemic, their leaders should look to apply lessons of urban success. New urban dynamos will likely emerge, and today’s leaders could still backslide. Austin is considering moving from council–manager to mayor–council governance, which could prove a consequential mistake. In any case, pro-growth, pro-affordability U.S. cities will have a chance to position themselves as the next boomtowns—if they take the necessary steps now.