People leaving costly cities while rent falls in other cities due to rising supply

See More Americans Leave Expensive Metro Areas for Affordable Ones: Analysis of census data shows the impact of the rise in housing costs on population flows by Chris Kirkham of the WSJ and Some Big U.S. Cities See Apartment Rents Fall for First Time in Years: Declines in San Francisco, New York and San Jose suggest the beginning of a downturn by Laura Kusisto, also of the WSJ.

People are always looking for a better deal, so it is not surprising they leave more expensive cities. Here are excerpts from the first article:

"An April report from Trulia researcher Mark Uh found that lower-income households represent a larger share of those moving away from the most expensive markets than their overall population in those markets. For example, those earning less than $60,000 a year make up 27.4% of all households in the San Jose metro area, but they represent nearly half of all households moving away.

Another study this year from California policy group Next 10 and Beacon Economics found that New York state and California had the largest net losses of domestic migrants between 2007 and 2014, and that lower- and middle-income people were more likely to leave."

Here is a table from that article.

A couple of excerpts from the second article are below. When prices rise, in a competitive market, that can, in the long-run, induce more firms to enter. The increase in supply then lowers prices.

"Apartment developers have flocked to downtown locations, catering to affluent young professionals willing to devote bigger chunks of their incomes to rent to be near restaurants and shops. Across the country, rents have jumped 22% in urban areas since 2010, according to Axiometrics. High-end apartments now command a 45% premium over older ones, while historically they have fetched about a third more, according to MPF.

But the same downtown areas that drove the boom are now the deepest pockets of weakness."

"The main cause of the rent slowdown is a flood of new supply, with more than 555,000 units under construction across the 100 largest U.S. metro areas, according to MPF. Tenants also are beginning to tighten their purse strings as rents have jumped by as much as 60% in some markets since 2010.

Growth of high-paying jobs, meanwhile, is slowing in New York, San Francisco and nearby Silicon Valley.

Almost 6,700 additional apartments are expected to be built in San Jose and nearly 6,500 more in San Francisco by the end of 2018, according to Axiometrics. New York is expected to get more than 42,000 new units during that same period.

At the same time, job growth is losing steam in some major cities [so demand is decreasing or not increasing as much has it had been-CM]. San Francisco added 26,000 new jobs in August 2016, about half the 47,000 jobs it added in the year-earlier period, according to an analysis of Bureau of Labor Statistics data by Mr. Rosen."

"Eugene Korsunsky, president of Intempus Realty, a San Jose real-estate brokerage firm that manages apartments and single-family homes for landlords, said for the past couple of years apartments sat on the market for about a week. Now it can take him nearly a month to find a tenant, he said."

Here is a timeline chart from the second article.