Is It Time to Buy in a Shrinking City?

Here’s the not news: Cities that have suffered population loss over the past few decades are eminently affordable. Buffalo, NY; New Orleans, LA; and Dayton, Cleveland, Toledo, and Youngstown, OH, have all seen their economies decline; unemployment rates rise; and brain drain—the exodus of highly skilled and educated residents—expand.

OK, now for the actual news: Shrinking cities are now experiencing a bit of brain gain. This is according to a study by Aaron M. Renn, a senior fellow at the Manhattan Institute, called “Brain Gain in America’s Shrinking Cities.” The findings include the following:

• Every major U.S. metro area that is losing population and/or jobs is gaining people with college degrees—at double-digit rates.
• As a group, America’s shrinking cities are holding their own with—and, in many cases, outperforming—the rest of the country in overall education-attainment rates.
• Most shrinking U.S. cities are increasing their educated-population share by adding more young adults with college degrees—and are catching up with the rest of the U.S. in young adult college degree–attainment levels.

Buffalo, Cleveland, Dayton, Detroit, New Orleans, Pittsburgh, Toledo, and Youngstown all saw their populations decrease, even as the number of residents with advanced degrees increased. Is it a surprise that the biggest shift happened in Detroit? It lost 160,000 residents; however, of those that were there, 167,000 got college degrees between 2000 and 2013—a sign, perhaps, of the influx of artists, nonprofit workers, and telecommuting techies who have recently made the ailing city their home.

Some of those cities—Buffalo and New Orleans among them—are starting to get more expensive as they get recognized as cities making a comeback (and, in some cases, cities with jobs), which means now might be the time to buy. Using our data, we sketched the real estate scene in five still-shrinking but brain-gaining cities.

Buffalo, NY

It’s cold. It’s gray. And the city of 275,916 (for now) is brimming with new energy, even as its population declines. Also: It’s cheap. The average listing price was $109,000 at last count, and the average sold price, $105,000, is pretty darn close to that. Homes of every type are available and, man, are some of them impressive.

Cleveland, OH

OK, it’s a wee bit gray here, too, but the city is on the rise, even if the population isn’t. Its top jobs include sales, medical doctors, and manufacturing, and the average listing price is $104,900 (the average sold price is $100,000). It’s good for renting, too: Rental prices have decreased by 10% in the past three months.

Detroit, MI

Could there possibly be bidding wars in Detroit? Not likely, but it’s still interesting to find that the average listing price is $19,900 and the average sold price is $42,000. Either way, the bargains are plentiful—more plentiful than the infrastructure, alas.

New Orleans, LA

The priciest of the bunch, the average listing price is $179,000; the average sold price, though, is $184,665. It’s still below the national average home price, which is $204,173. On the 10th anniversary of Hurricane Katrina, the city is getting a lot of love.

Pittsburgh, PA

Pittsburgh still has plenty going on, even if the steel mills are long gone. The average listing price is $149,000, and the average sold price is $145,000.

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