The WSJ recently published a pair of articles (here and here) talking about where the US is growing and shrinking — through charts. The three components of this are domestic migration, international migration, and births minus deaths.
One of the key themes for the year ending in June 2025 is that the country is seeing significantly less international migration. According to the WSJ, more people moved out of the US than moved in last year for the first time since the Great Depression.
International migration is critical because around 65% of all counties in the US are now experiencing more deaths than births, meaning the fertility rate is declining. This is an increase from around 34% of all counties as recently as 2010.
On the domestic front, one interesting finding is that, for the first time in many years, the Midwest added more domestic migrants than it lost. As expected, the growth region for domestic migration remains the South, though it has slowed.
Also interesting is the extent to which San Francisco has rebounded. During the depths of the pandemic, things appeared dire for the city. Nobody was more untethered than tech workers, and the feeling was that they'd never return. Nope. The city has grown for the last three years.
The decline in international migrants is not unique to the US. The same thing is true in Canada. But we (Canada) remain in the business of attracting the smartest and most ambitious people from around the world. I have no clue what's going on in the US these days — it changes hour by hour — but maybe they'd like to remain in this business as well.
Cover photo by Austin Neill on Unsplash
Charts from The Wall Street Journal
In the olden days here in Toronto, approved development land used to sell for a premium compared to unapproved land. This was true because approved land meant you could start construction much sooner. And since time has value, this was worth something.
Today, this is far less valuable to developers (if at all) because, in most cases, the market does not support new construction. So, the land may be approved, but what does one do with it?
Rather than speed, I would say that the most valuable feature right now is the ability to be patient. Developers need to be able to stay solvent long enough for the market to return. But this does not mean that there isn't a cost to permitting, approvals, and lengthy pre-construction periods.
Here is a recent paper (that I discovered via Thesis Driven) by economists Evan Soltas (Princeton) and Jonathan Gruber (MIT) that asks: "How Costly Is Permitting in Housing Development?" What they discovered in the Los Angeles market is the following:
Developers have been willing to pay roughly 50% more for pre-approved development land (averaging about $48 per square foot).
The permitting process in Los Angeles accounts for about 40% of the time required to develop and construct a new housing project.
Approximately one-third of the gap between home prices and construction costs can be explained by permitting costs and delays.
This last point is an interesting one to focus on because it tells you how much regulatory fat there is in the system. In a perfectly free and efficient market, the market price of a home should, in theory, be roughly equal to the cost of the land, construction costs, and the developer's margin.
When you have a massive gap between the cost of the physical materials and labour required to build the home and the price of the home, it means that there are other costs being shouldered. The paper refers to some of these as "pure wait" (time) and "capitalized hassle" (dealing with bullshit).
The WSJ recently published a pair of articles (here and here) talking about where the US is growing and shrinking — through charts. The three components of this are domestic migration, international migration, and births minus deaths.
One of the key themes for the year ending in June 2025 is that the country is seeing significantly less international migration. According to the WSJ, more people moved out of the US than moved in last year for the first time since the Great Depression.
International migration is critical because around 65% of all counties in the US are now experiencing more deaths than births, meaning the fertility rate is declining. This is an increase from around 34% of all counties as recently as 2010.
On the domestic front, one interesting finding is that, for the first time in many years, the Midwest added more domestic migrants than it lost. As expected, the growth region for domestic migration remains the South, though it has slowed.
Also interesting is the extent to which San Francisco has rebounded. During the depths of the pandemic, things appeared dire for the city. Nobody was more untethered than tech workers, and the feeling was that they'd never return. Nope. The city has grown for the last three years.
The decline in international migrants is not unique to the US. The same thing is true in Canada. But we (Canada) remain in the business of attracting the smartest and most ambitious people from around the world. I have no clue what's going on in the US these days — it changes hour by hour — but maybe they'd like to remain in this business as well.
Cover photo by Austin Neill on Unsplash
Charts from The Wall Street Journal
In the olden days here in Toronto, approved development land used to sell for a premium compared to unapproved land. This was true because approved land meant you could start construction much sooner. And since time has value, this was worth something.
Today, this is far less valuable to developers (if at all) because, in most cases, the market does not support new construction. So, the land may be approved, but what does one do with it?
Rather than speed, I would say that the most valuable feature right now is the ability to be patient. Developers need to be able to stay solvent long enough for the market to return. But this does not mean that there isn't a cost to permitting, approvals, and lengthy pre-construction periods.
Here is a recent paper (that I discovered via Thesis Driven) by economists Evan Soltas (Princeton) and Jonathan Gruber (MIT) that asks: "How Costly Is Permitting in Housing Development?" What they discovered in the Los Angeles market is the following:
Developers have been willing to pay roughly 50% more for pre-approved development land (averaging about $48 per square foot).
The permitting process in Los Angeles accounts for about 40% of the time required to develop and construct a new housing project.
Approximately one-third of the gap between home prices and construction costs can be explained by permitting costs and delays.
This last point is an interesting one to focus on because it tells you how much regulatory fat there is in the system. In a perfectly free and efficient market, the market price of a home should, in theory, be roughly equal to the cost of the land, construction costs, and the developer's margin.
When you have a massive gap between the cost of the physical materials and labour required to build the home and the price of the home, it means that there are other costs being shouldered. The paper refers to some of these as "pure wait" (time) and "capitalized hassle" (dealing with bullshit).
This is an important way to think about the efficiency of housing markets, because minimizing the gap is a clear way to make housing more affordable.
Cover photo by Josh Miller on Unsplash
Bruno Carvalho has just published a new book that is right in the wheelhouse of this blog. It's called The Invention of the Future: A History of Cities in the Modern World.
The book starts in the mid-18th century with cities like Lisbon, Paris, and London. However, more than being just a history of cities, it is (from what I've read) the story of how city builders throughout history have tried to predict and create the future, only to often get it wrong.
In the words of Carvalho (via CityLab): "The constant of urbanization is change, so we have to always imagine our solutions as being contingent."
The same is, of course, true today. For example, building tunnels for Tesla cars may seem like a clever and futuristic solution to urban traffic congestion, except that it's hard to imagine it actually working (also via CityLab):
"One of the values of history is to give us a sharper sense of what’s new in the present. Many people imagine solutions that to them represent the great rupture, but that’s not always the case. The tunnels are a good example; they bring together the problems of cars having very low carrying capacity and subways being very hard to build. That doesn’t strike me as a very futuristic approach to mobility, but rather one that just hasn’t learned enough about the past."
I now have Carvalho's book on my reading list, and I thought I would share it here in case some of you would like to do the same.
Cover photo by Michiel Annaert on Unsplash
This is an important way to think about the efficiency of housing markets, because minimizing the gap is a clear way to make housing more affordable.
Cover photo by Josh Miller on Unsplash
Bruno Carvalho has just published a new book that is right in the wheelhouse of this blog. It's called The Invention of the Future: A History of Cities in the Modern World.
The book starts in the mid-18th century with cities like Lisbon, Paris, and London. However, more than being just a history of cities, it is (from what I've read) the story of how city builders throughout history have tried to predict and create the future, only to often get it wrong.
In the words of Carvalho (via CityLab): "The constant of urbanization is change, so we have to always imagine our solutions as being contingent."
The same is, of course, true today. For example, building tunnels for Tesla cars may seem like a clever and futuristic solution to urban traffic congestion, except that it's hard to imagine it actually working (also via CityLab):
"One of the values of history is to give us a sharper sense of what’s new in the present. Many people imagine solutions that to them represent the great rupture, but that’s not always the case. The tunnels are a good example; they bring together the problems of cars having very low carrying capacity and subways being very hard to build. That doesn’t strike me as a very futuristic approach to mobility, but rather one that just hasn’t learned enough about the past."
I now have Carvalho's book on my reading list, and I thought I would share it here in case some of you would like to do the same.
Cover photo by Michiel Annaert on Unsplash
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