2) THE DECLINE OF THE COASTAL SUPERSTAR CITIES

Beyond anecdotal accounts of bankers fleeing Manhattan and tech workers saying sayonara to the Bay Area, we have loads of private data to back up the story that superstar cities are in trouble.

According to U-Haul’s annual review, California lost more people to out-migration than any other state in 2020, and the five largest states in the Northeast—New York, Pennsylvania, New Jersey, Massachusetts, and Maryland—joined California in the top 10 losers. Rents have fallen fastest in “pricey coastal cities,” including San Francisco, Seattle, Los Angeles, Boston, and New York City, according to Apartment List. Zillow data also show that home values in New York, San Francisco, and Washington, D.C., are growing below the national average.

These migration trends could spell long-term trouble for cities such as San Francisco and New York, where municipal services rely on property taxes, sales taxes, and urban-transit revenue.

Absent federal intervention, “the financial situation that nearly every transit agency in America is in will certainly lead to significant service cuts, which inevitably lead to terrible spirals,” Sarah Feinberg, the interim president of the New York City Transit Authority, told me. “Service reductions are bad for commuters, devastating for essential workers, and detrimental to the economy.” If people leave New York—and newcomers don’t immediately take their place—that will reduce the city’s subway and bus revenue, which will lead to service cuts; that will make New York a harder place to live, so more people will leave the city; transit revenue will be reduced further, and on we go.