Zhang Wei and Ananya are cruising down the highway in their laser-guided Nissan Pivo at exactly 88.51 km/h. Beyond the seemingly endless fields of gmo sugar cane, they start to see the tops of their city’s largest skyscrapers, peaking over the horizon. As dusk begins to settle into night, the highway is already receding into pitch black since the Pivo doesn’t need to see, but the distant skyscrapers give off a faint green glow, their curtain walls brimming with energy-producing bio-luminescent algae. The only light for kilometers around is a sign, welcoming them home to Guangzhou in three different languages. It sits on the side of the highway and marks the city’s former urban growth boundary, and before that, the former municipal boundary. But Zhang Wei and Ananya know that urban growth boundaries no longer exist. There is no need for them anymore since Guangzhou’s population growth is zero. And it is not just Guangzhou that has stopped growing, nor just the People’s Republic of China. Since 2100, the entirety of Earth’s population, all 15 billion people, is now static…
At least that is what Shlomo Angel of New York University and the Lincoln Institute of Land Policy would have us believe. In his new book, Planet of Cities, and his latest policy report, “Making Room for a Planet of Cities”, Angel (also of Pattern Language fame), considers that as 80% of global population shifts to cities, population growth will eventually be reduced to zero. “We now know that the movement of people to cities everywhere is accompanied by increased life expectancy and lower fertility… Urbanization goes hand-in-hand with lower rates of population growth” Angel said in a recent Atlantic Cities interview. So what would life be like for Zhang Wei and Ananya once earth’s population stopped growing? What does it mean for cities and market-driven economies? What happens to the concept of real estate?
We don’t need to look to the year 2100 to postulate the impacts of population stagnation or decline; we hear reports about the shrinking populations of Japan, Austria, Germany, Greece, Italy, Spain, Sweden and Russia today. Even China, at least due in part to the government enforced one-child policy, is facing reduced population growth. The impacts of these countries’ shrinking and stagnant populations in regards to labor output, elderly dependencies, and consumerism are discussed ad nauseam. Of course post-industrialization does not always equate to population decline, countries like France, Great Britain, and the United States’ positive population growth are partially buoyed by migration, most often by immigrants moving from less-developed countries (although a recent Harvard study argues it is also a combination of societal norms and gender equity).
To understand the impact that a declining population has on real estate values, one has only to look at some of the United States’ shrinking cities for examples*. A 2010 report conducted by the Research Institute for Housing America and the Mortgage Bankers Association, A Study of Real Estate Markets in Declining Cities, analyzed the impacts that declining populations have on real estate values, and (more) importantly, how real estate lenders could predict and react to these trends. Two discussions in the report roused my interest (*ahem* suspicion): home appraisals should include an assessment of the greater neighborhood; and a reduction of credit supply to declining neighborhoods. Since redlining is illegal, lenders are faced with the ugly task of “substantially tightening underwriting standards in all neighborhoods within a metropolitan market … until it becomes clear which neighborhoods remain viable… [further] hindering recovery efforts for the metros and neighborhoods most in jeopardy.” The result: development and investment shrink, lenders stop lending, and real estate values drop. We have seen this happen in New York City in the 1960’s and 1970’s: land values got so low in some neighborhoods, it was cheaper to abandon and property became valueless. But that is just for declining populations. What if it is just a stagnant population? And what does planning mean when there is no longer population change?*Of course, in the near term (~2050), urban populations are going to dramatically increase in less-developed countries (check out the UN’s 2012 report about this trend. This same report also states that urbanization correlates to a reduction in population growth, with some caveats about women’s reproduction rights). This increased demand will surely have major impacts on urban land values and largely agricultural fringe lands. However for this exercise, we are looking deeper into the future (~2100).