What a difference six months make.
Take Manhattan. In July, Wall Street-area apartment seekers were by and large out of luck. Average rental prices had hit an all-time high, and inventory was tight. And the well-suited bankers pouring out of Sloane Street bars belied a recession.
Within a few months, though, Lehman Brothers folded, the S&P 500 lost half its peak value and layoffs mounted.
Now, asking prices for rentals are down 10 per cent from July, according to the Real Estate Group New York, a research firm, and people are packing up: 373,364 residents have left New York City in the last year, according to the Internal Revenue Service, a net loss of 80,000.
Unemployment is at 7.8 per cent, above the national average of 7.2 per cent, thanks to a 10 per cent December drop in financial services jobs. The US Conference of Mayors estimates New York will lose 181,000 jobs in 2009.
This type of change is being felt across the country. Plummeting housing prices, a growing cost of living and high unemployment have people leaving Los Angeles in droves. How fast are they ditching the basin? If you add up all the households abandoning Detroit, Miami and New York, three of the country's fastest-changing cities, it's still less than the net outflow of Los Angeles. That ranks the City of Angels first.
Behind the numbers
Based on housing price, inflation, employment and migration trend data from ZoomProspector, a San Francisco-based business relocation consultancy, the US Bureau of Labor Statistics, Internal Revenue Service, National Association of Realtors and Census Department, Forbes evaluated the 40 largest US cities to determine where the economic landscape has changed most over the last year. These cities are not Census-defined metropolitan statistical areas, but core urban areas.
We "are in financial distress, but the economic pain is not evenly distributed by geography," says Anatalio Ubalde, chief executive of ZoomProspector. "It doesn't always come down to something as simple as the coast versus the Midwest. The numbers don't always bear that out as much as people want simple economic explanations that are geographic."
What is simple: Shifts in housing prices, inflation and employment are altering America's cities. In Detroit, 20 per cent unemployment means a vacant inner city where one can buy homes for $1. In Miami, where home prices fell 16.9 per cent and inflation rose 4.2 per cent in 2008, change plays out in empty storefronts and unfinished buildings dotting the skyline. Formerly a sign of urban renewal and job creation, those construction projects now embody a staggering hangover from the heady housing boom.
These issues wreak havoc on local governments. Just as falling home values, and, as a result, lower property tax assessments, hit local and state municipalities in the wallet, unemployment and turmoil in the private sector hammer the public tax base. In New York, for example, troubles on Wall Street are expected to suck $3.5 billion from state budgets, according to the comptroller's office.
In tough times like these, cities are particularly focused on attracting new industries that can bring in cash and jobs to the region. One major target? Overseas companies looking to relocate.
"A lot of companies went overseas and are now moving back to the US to consolidate," says Pat O'Brien, executive director of the Milwaukee 7, an economic development group. He points to the recent move of C&D Technologies, a Blue Bell, Pa.-based energy storage company employing 300 workers, from China back to Milwaukee, where it owns a plant.
"We focus on driver industries," he says. "Those industries that sell goods and services outside of the region, thereby creating new capital investment into the region."
It's a great idea and a perfect way to save a sliding economy that's changing for the worse. The only problem is execution. After all, in this economy, where every city is shedding jobs, there are more areas looking for growing companies than there are companies looking for new cities.