The housing crisis in the United States is only getting worse as the population shrinks

News that the American population barely grown this year, along with steadily declining birth rates and declining immigration, raises the possibility of the nation shrinking in the not-too-distant future. So fewer people should make housing more affordable for those looking for it, right? Well, don’t expect too much.

people tend not wanting to live in shrinking placesand if the US population begins to decline, it could lead to even weaker housing demand in stagnant metropolitan areas and an even worse housing affordability crisis in the fewest places that continue to attract new residents. .

To begin with, a country without any population growth does not need to have a growing housing construction industry. This will lead to consolidation among homebuilders and the building materials supply chain. If you can’t increase your profits through higher sales volumes, you try to do so through reduced competition and cost reductions. And that means tightly controlled housing production – the exact kind of behavior we’ve seen from publicly traded homebuilders, because they’ve increased their market share during the last decade. All other things being equal, this will tend to contain housing supply and make housing more expensive.

When it comes to housing, it might be better to think of the United States as a country of 384 metropolitan areas (plus 50 million Americans who don’t live in places large enough to be considered a metropolitan area) rather than one continuous country. In 2021, America’s population grew by just 0.1% – the lowest annual rate of expansion since our country’s founding. But housing dynamics are best seen across the various metropolitan areas that are growing and shrinking. Of the 384 metropolitan areas, 72 had declining populations in the decade leading up to 2020, according to the census.

By population size, the largest of these declining metros are Akron, Ohio, Syracuse, New York, and Toledo, Ohio. A quick search on Zillow shows that there are plenty of homes for sale in Toledo for under $200,000, which is great news for people looking to buy homes in Toledo, but the biggest impact It could be that people won’t want to move to Toledo if they interpret a declining population as a sign of declining prospects for the area.

There are 39 other metropolitan areas that grew between 0% and 2% in the 2010s – imagine these places actually starting to lose population in the 2020s due to a continued decline in birth rates and immigration. At this point, you’re talking about much larger metropolitan areas — eight of them with populations over 1 million, including Chicago, St. Louis, Pittsburgh, and Cleveland. Perhaps the favored neighborhoods of those metros will remain desirable — the Loop in Chicago and riverside communities in other places — but the overall negative momentum could lead to more people wanting to leave and fewer people wanting to move in.

And this will put pressure on the remaining areas that are growing rapidly. Only about 67 million Americans live in metros that grew by at least 15% in the 2010s — places like Austin, Texas, Raleigh, North Carolina, and Boise, Idaho. While there’s room for further growth in all of them, we’ve seen affordability issues arise over the past year, and it’s unclear how quickly infrastructure and homes can be built to keep pace with demand. Current residents increasingly frown on the influx, which they blame for increased congestion, inflation and cultural change.

The housing dynamics are similar to the concept of “climate refugees” – the idea that the impact of wildfires, hurricanes and floods will force people to flee dry, hot places in the west and southern coasts. -is to more resilient parts of the country. The parallel to population growth might be something like “demographic refugees”, Americans seeking to leave the ever-increasing number of places with declining populations to move to the smaller number of places that continue to grow, offering better job opportunities and the hope of a more prosperous future.

So while there will be plenty of affordable housing in Toledo and Akron, it won’t help solve America’s housing problems if it just means demand in Austin and Boise — or wherever people want really live – grow and grow.

Conor Sen is a Bloomberg Opinion columnist and the founder of Peachtree Creek Investments. He has contributed to the Atlantic and Business Insider and resides in Atlanta.

Warning: This article first appeared on Bloombergand is published by special syndication agreement.