Population and density

Chicago’s population is down about 25% from its peak back in 1950. That statement might conjure up images of empty blocks of homes, as you see in Detroit. In fact, Chicago remains quite crowded. I cannot find the article, but I recall reading that Chicago now has more households than ever before. Average household size has shrunk dramatically since 1950, due to factors such as fewer children and more independent living for young adults and the elderly.

The OC Register reports some seemingly odd data for California. Its housing stock has grown since 2020, its population has shrunk, and yet home prices have soared. This has led to dark conspiracy theories that there are lots of empty houses in California held by speculators, and that this is boosting prices. Not so.

If California’s population is well off its peak, and developers keep on building housing, why does the cost of living in the Golden State remain lofty? . . . 

Start with the basics: California had 38.2 million residents living in households last year – that’s down 375,800 since 2020, or a 0.9% loss. In the same timeframe, California’s housing stock grew to 14.8 million residences – a 432,700 improvement since 2020, or 3% growth.

The puzzle can be resolved if we consider the nearly 4% decline in average household size:

The average number of Californians living in an occupied housing unit was 2.75 last year – that’s down from 2.86 in 2020. That’s not an insignificant change across 39 million residents.

Why did it occur? There’s the pandemic effect of people wanting larger living quarters, often shunning roommates. Others got historically cheap mortgages in 2021-22 and won’t move, no matter how oversized their residence is for their needs.

Some of this trend may be adult children leaving the parents’ home – with destinations both in and out of state. Young families frequently exited for other states, too. Or it’s older residents losing a spouse.

No matter the cause, smaller households gobble up housing supply.

In addition, birthrates are declining.

I believe that Kevin Erdmann was the first to document the fact that a booming economy in a housing constrained market (such as LA) leads to population loss, as working class families move to cheaper states and are replaced by younger childless professionals.  Selfish empty nesters like me live in houses that are far too big for our needs.  (I recall back in the 1990s driving a Chinese visitor around one of the nicer neighborhoods in Newton, Massachusetts.  The awestruck lady asked how many families lived in each house. I gave my wife the “Who’s going to tell her” look.)  

PS.  Although Chicago remains relatively “full” despite a 25% population decline; there are rust belt cities that are much worse off.  Detroit, Cleveland and St. Louis have seen population declines of 60% to 70%, and thus do have vast areas that are emptying out.

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