North Carolina boasts three of the top four metro areas in a new national ranking comparing a decade’s worth of housing growth to job growth. California claims the three lowest rankings in the list compiled by the Manhattan Institute.
Durham-Chapel Hill ranks No. 1 in the list of 20 metro areas, ahead of Houston-The Woodlands-Sugar Land in Texas. Raleigh ranks No. 3. Charlotte-Concord-Gastonia ranks No. 4.
Arizona’s Phoenix-Mesa-Scottsdale area rounds out the top five.
On the other end of the scale, the San Francisco-Oakland-Hayward area in California ranks dead last. San Jose-Sunnyvale-Santa Clara ranks 19th out of 20, and Riverside-San Bernardino-Ontario, California, ranks No. 18.
The Los Angeles, New York, and Boston metro areas rank Nos. 15, 16, and 17.
The list is tied to MI’s newly released study titled “The Jobs-Housing Mismatch: What It Means for Metropolitan Areas.” It compares employment growth to new housing permits during the last decade-long economic expansion before the COVID-19 pandemic.
The report explains that government policies can stand in the way of communities matching housing options to job growth.
“Many American metropolitan areas exhibited robust job growth in the favorable economic conditions that prevailed for most of the past decade, up to the pandemic-induced recession of 2020,” according to an executive summary of the report from Eric Kober, Manhattan Institute senior fellow. “However, not all those metros matched job growth with housing growth. Largely because of restrictions on land use, some of the nation’s most successful and productive metropolitan areas failed to meet housing demand.”
“The populations of those areas became better educated and earned higher incomes,” Kober continued. “Even though many jobs that don’t typically require a college education paid better in those metros, less-educated workers gravitated to the growing metros where housing was more affordable. When high-wage, high-productivity metros exclude many of the workers who would want to work there — but can’t find housing that meets their needs and that they can afford — the national economy grows less than it could have.”
Kober praised metro areas that fared well on the list. “The most impressive areas successfully achieved both density and plentiful supply,” he said. “These metros are best positioned for the future.”
The study offers a warning. “Many of the successful metros are struggling to shift housing patterns to permit higher density, and all want to increase the use of public transit,” Kober said. “The federal government can play a constructive role in helping U.S. metropolitan areas transition to higher densities and more transit use with financial aid for planning, housing assistance, and public transit.”
“However, such spending has often been wasteful in the past, and constant vigilance is required to ensure that new spending is cost-effective,” he warned.
“Some commentators have also suggested that the federal government, by withholding or conditioning aid, can force resistant communities to liberalize zoning and become more open to denser and more affordable types of housing,” Kober added. “Such hopes seem unrealistic, given the federal government’s lack of authority and expertise in land-use regulation. As the deleterious effects of the jobs–housing mismatch become clearer, actions are increasingly being taken at the state and local levels to lift the many regulatory impediments that stop new housing from being built where it’s needed.”
In an interview with Carolina Journal, Kober offered a warning for N.C. communities that fare well in the new ranking. “The challenge that a lot of metropolitan areas face that have been successful in the past is that they’ve been very reliant on the fact that they have land,” he said. Relying extensively on undeveloped land can lead to traffic problems that break a unified metropolitan labor market into smaller units, he added.
“Watch out for getting into a situation in which your attractiveness to business as a place which combines a good business environment and relatively affordable housing — watch out for danger signs that that is becoming less so,” he said. “Try to plan sensibly.”
“Try to build on your assets incrementally,” he told CJ. “It’s important to be cost-effective. Cities looking at this situation can often conclude that they need to build a very, very expensive fixed rail transit network when they’ve never really exhausted the potential of, let’s say, bus rapid transit.”
N.C. metro areas will need to address transportation issues at some point. “Do it with the idea of getting the best value for your investments.”