What Makes Cities Successful?

This is related to yesterday's post "State 'Income Migration' Claims Are Deeply Flawed":

At the intersection of real estate and urban economics: Albert Saiz uses big data to understand real estate dynamics. As a professor in the Department of Urban Studies and Planning and director of MIT’s Center for Real Estate, his work is at the confluence of urban policy and city-making and the factors that drive real estate markets. An urban economist and director of the MIT Urban Economics Lab, Saiz studies the industrial composition of cities with an eye toward understanding what makes cities successful. He also creates and studies incredibly-detailed information about housing markets and how urban growth impacts real estate markets.

Immigration explains half of city growth

Saiz’s focus is primarily on housing markets, with a particular view on understanding the demographic influences impacting their growth. “Immigration explains 50 percent of the differences in growth between metropolitan areas in the United States,” he says. “If you want to understand real estate markets or housing markets, construction values, etc., you have to understand immigration and immigration trends.”

He also studies several other key drivers of city growth and demand for housing and real estate assets. These include areas of low taxation, high levels of an educated population, and more lifestyle-oriented influences. “As recently as 20 years ago, we tended to believe that people followed jobs,” Saiz explains. “It is still the case that productive areas are becoming more attractive for housing demand, but it is also true that jobs are following people. And people are moving more for lifestyle and amenities.” Today, Saiz’s students are more likely to indicate they want to work in a particular city than for a particular company. That means firms that want to attract young professionals have to locate in these more highly desirable areas. ...