Chicago’s population is down about 25 percent from its peak in 1950. This statement might conjure up images of empty housing blocks, as seen in Detroit. In fact, Chicago remains very busy. I can’t find the article, but I remember reading that Chicago now has more homes than ever. Average household size has declined significantly since 1950, due to factors such as fewer children and more independent living by young adults and older people.
THE OC register reports seemingly strange data for California. Its housing stock has increased since 2020, its population has decreased and yet housing prices have skyrocketed. This gave rise to dark conspiracy theories that there were many empty homes in California owned by speculators, driving up prices. This is not the case.
If California’s population is far from its peak and developers continue to build housing, why does the cost of living in the Golden State remain high? . . .
Start with the basics: California had 38.2 million residents living in households last year, a decrease of 375,800 since 2020, or a loss of 0.9%. In the same time frame, California’s housing stock increased to 14.8 million residences, an improvement of 432,700 since 2020, or growth of 3%.
The puzzle can be resolved if we consider the nearly 4% drop in average household size:
The average number of Californians living in occupied housing was 2.75 last year – up from 2.86 in 2020. That’s not an insignificant change for 39 million residents.
Why did this happen? There is the pandemic effect of people wanting bigger homes, often avoiding roommates. Others got historically cheap mortgages in 2021-22 and won’t move, even if their residence is oversized for their needs.
Part of this trend may be due to adult children leaving the parental home – for destinations both in and out of state. Young families also frequently moved to other states. Or even older residents lose their spouse.
Whatever the cause, small households are gobbling up the housing supply.
Additionally, the birth rate is declining.
I believe Kevin Erdmann was the first to document that a booming economy in a tight housing market (like Los Angeles) leads to population loss, as working class families move to cheaper states and are replaced by younger, childless professionals. Selfish, empty people like me live in houses that are way too big for our needs. (I remember in the 1990s driving a Chinese visitor to one of the nicer neighborhoods in Newton, Massachusetts. The amazed lady asked me how many families lived in each house. I I gave my wife the “Who’s going to tell her?” look.
PS. Even though Chicago remains relatively “full” despite a 25% population decline; there are cities in the rust belt that are in a much worse situation. Detroit, Cleveland and St. Louis have seen their populations decline by 60 to 70% and therefore have large areas that are emptying.
