If America’s biggest metros are shrinking, why are their housing markets on fire? And if rents are rising in almost all of these cities, how can they possibly be shrinking?

There are a few possible answers. One is that the census data are just wrong. For example, the government may have failed to count families that have been moving around during COVID waves, taking extended breaks from their city apartments without actually abandoning them. Or maybe the census took an accurate snapshot of city-population levels in 2021 but hasn’t yet caught up to people surging back into America’s biggest cities in the past few months, creating yet another great urban renewal. In these scenarios, many places that looked imperiled during the data-collection process are actually crowded and booming right now.

A second possibility is that my somewhat-dystopian prediction from 2019 is coming true: America’s densest cities are becoming playgrounds for the rich and mostly childless. In 2001, L.A. County recorded 153,000 live births. In 2021, it recorded fewer than 100,000 births. Perhaps middle-class workers and families with young kids used the pandemic as an opportunity to accelerate their move to the suburbs or cheaper towns. As poorer and younger families left, richer and older people stayed, and some affluent young people moved in. In this scenario, some cities might have gotten richer even as they got smaller, pushing up rents and home prices.

The third, simpler answer is: It’s inflation, stupid.