International migration and city growth

Wendell Cox recently posted a piece on Newgeography slicing and dicing the Census Bureau’s 2008 estimates of county populations and domestic migration.  He tells us that:

• people continue to move to the suburbs of large metropolitan areas, and away from core areas;
• in 2008, large metropolitan areas’ core counties experienced a net domestic loss of 314,000, and an annual average loss of 580,000 between 2001 and 2008; 
• net domestic migration gains were down to 192,000 in suburban counties from an average gain of 246,000 over the decade.

The story, as Wendell sees it, is that slowing domestic migration to the suburbs does not signify a flight back to the cities.   Rather, it is a return to normal migration patterns — spiking home prices between 2001 and 2007 created a domestic migration bubble as homeowners cashed out and moved to cheaper areas.

But there is another interesting phenomenon lurking in the the Census data.  Even after accounting for domestic migration, demand for central counties has risen.  And that rise often has been driven by international migration.

It’s clear that demand for central counties has been rising if we look at changes in total population rather than just domestic migration outflows.  In 36 of the 48 large metropolitan areas analyzed by Wendell, the core counties added people between 2001 and 2008.  In four of the other twelve metropolitan areas, both core and suburban counties lost residents; it is hardly surprising that the core county of a declining metropolitan area will lose population.  Only eight metropolitan areas fit the “flight to the suburbs” model — an increase in suburban population and a decrease in  core county population.

Some cities can thank domestic migration for the rise in their core-county populations.  Austin, for example.  It added 41,000 from domestic migration between 2001 and 2008, nearly 11,000 from 2007 to 2008 alone.

But the growth of other core counties has been driven by international immigration.  For example, Los Angeles County lost a staggering 1,007,000 residents due to domestic migration between 2001 and 2008.  Its population nevertheless grew by a total of 318,000.  It more than replaced its departing residents with healthy natural growth and international immigration.  The Census Bureau estimates that between July 1, 2007 and July 1, 2008, Los Angeles County lost 103,000 residents to domestic migration — but added  87,000 from natural growth and 70,000 from international migration, a net population increase of 54,000.

The story is the same in booming Dallas.  Between July 1, 1007 and July 1, 2008, Dallas County lost 19,000 residents to domestic migration, but added 20,000 from international immigration.  Its international migrants replaced its departing residents one for one.    

One explanation of this phenomenon is that international immigrants are outbidding existing residents.  The supply of housing in central cities is relatively inelastic thanks to tighter restrictions on new construction, NIMBYism, and the generally higher cost of dense, infill construction.  A central city can add only so many people in a single year.  A large inflow inevitably triggers a rise in prices and a corresponding outflow.  

An alternate explanation is that demand is in fact dropping for core counties, causing a decline in housing costs, which in turn is attracting less affluent international migrants.   Home prices of course have dropped sharply nearly everywhere over the last year or two.  But that was not the case for the preceding seven years, and the international migrant inflows did not start last year.  Regardless, declining demand can’t be squared with rising population.  Each year, more people, not fewer, want to live in these central counties.

I suspect that core counties are relatively more attractive for international immigrants than domestic residents.  Immigrants are attracted to clusters of immigrants of the same nationality; these clusters naturally develop in core counties first, and tend to be self-sustaining.  Perhaps immigrants are more comfortable with a denser, central-city environment.  And perhaps domestic residents have a better grasp of the opportunities that exist outside the core county.

Whatever the reason, international immigration is driving demand for many the  core counties in many metropolitan areas.  The recession will cause international immigration to plummet.  If international immigrants have been outbidding domestic residents, then domestic migration will drop sharply.  On the other hand, if domestic migration has been prompted by a distaste for central cities, the outflows will continue.  We’ll see.