Las Vegas City Neighborhoods Fare Worse Than Suburbs

Much of the hype from the Great Recession has focused on how exurbs are losing population while closer in neighborhoods are gaining population. In reality the opposite is often true. At last week’s American Planning Association conference in Los Angeles, Alan Mallach of the Brookings Institution highlighted that in Las Vegas the suburbs and exurbs have survived the recession while the older parts of the city have not fared as well.

Mr. Mallach who researches urban revitalization and real estate divided sun-belt towns into four categories: bust high-cost, bust low-cost, small-decline and stable. Mallach found that although some cities particularly in California, Florida, and Nevada have high unemployment rates and depressed housing prices, any notion that the sunbelt is declining is a myth. Some sunbelt cities are outperforming the rest of the country. Texas metro areas have been some of the least affected places in the country by the recession. Mallach found that over the past fifty years, the only significant variable in predicting migration and growth is the average January temperature. This research supports the idea that the Sunbelt will begin growing again when the recession ends.

Typically the ghost towns in boom/bust cities such as Las Vegas are not distant suburbs but closer in neighborhoods. Home prices in the newer planned suburban communities decreased less than home prices in the older urban neighborhoods. The “less walkable” suburban developments saw smaller price depreciation than the “more walkable” urban developments. The vacancy rate in the new planned communities actually decreased during the recession. And during the recession, most home buyers continued to purchase a dream-house in a planned community with a 15-30 minute drive from their workplace. These homeowners do not consider a 15-30 minute one-way drive time an inconvenience. Other boom/bust cities across the country have housing characteristics similar to Las Vegas.

Mr. Mallach does not expect a radical change in the economy of demographic patterns. The most popular places in boom/bust cities like Las Vegas will most likely remain the suburbs.

There are two takeaways from this research. First, while many have been quick to promote the death of the suburbs and the rebirth of central cities, in many metro areas this is not the reality. While revitalized cities have many positives, policymakers need to use facts not desires to create new policy.

Second, many people still prefer to live in suburban areas. Yes many people, particularly the young prefer cities for their variety and excitement. Historically, younger people prefer cities. As these younger people age, have families, look for better schools and more affordable housing, they often move to the suburbs. People should be free to choose between the cities and the suburbs; both have advantages and disadvantages. The U.S. is a large country; promoting the same solution for every metro area is not the way to improve the neighborhood or the economy.