America’s Fastest Growing Cities Rue Their Successes

Most newspapers, TV stations, and websites did stories about the fastest growing cities when the Census put out its list of municipal population size for 2010. The media compared these to 2000 figures. The cities on the list are almost all failures at least when measured by unemployment and housing.

The April data for some cities showed growth of 40% or more over the decade. The media presented these towns as successful in a way that slower-growing urban areas were not. Almost all of the reports neglected to look beyond the top-line figure.

Places like Palm Coast Florida and Las Vegas had unemployment rates in the 3% to 4% range in 2000. Their real estate markets were stable in most cases. Like many municipalities each wanted to add more people to make local business and consumer economies grow and to increase tax bases. It did not turn out that way.

Cities like Las Vegas believed that their largest industry, like gambling and tourism, would offer explosive growth for years. High rollers and low rollers were pouring into Vegas. The large Indian casinos across the US had not taken as much business as they have now. The national economy was also good then, nearly seven years before the great recession.

Builders in Las Vegas went to local banks with forecasts that showed a city which was adding tens of thousands of residents each year.  They argued that the trend should continue. It did, until the region became over built. Home equity loans grew. For a time, the region became more prosperous. Then gaming was hit by the downturn and the resetting of interest rates on many mortgages pushed monthly payment much higher.

Las Vegas has one of the highest unemployment rates in the US. It also has the highest foreclosure rate of any large city. Las Vegas’s enormous success could not be sustained because there is almost no city of any size that can support 50% population growth in a ten-year period. The Census data is proof of that. Almost all of the fastest growing cities in the US are now among the most troubled.

Douglas A. McIntyre