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MARKET REVIEW: San Antonio’s Growth Part of a Macro-Level U.S. Trend

The United States is experiencing a profound shift in settlement patterns. Older metro areas in the north that were once America’s foremost economic hubs are ceding this role to southern ones. Texas has been ground zero for this shift, namely within its four largest metros, Austin, Dallas, Houston and San Antonio. As a roving urban affairs journalist for Forbes, I recently lived for a month each in all four, and became fascinated by their rapid urbanization. The least-touted among this bunch has been San Antonio, but in many ways, the city is a microcosm of this nationwide trend.

The trend is best summarized as the ongoing migration from the Snowbelt into the Sunbelt. For decades, the northern part of America—namely the
Northeast and Midwest—has suffered either population decline or mild growth, while the South and West has exploded. This continued between 2000 and 2010, according to recent Census figures. The South and West saw well over 5 times the net population growth as the Northeast and Midwest; and its growth in percentage terms was about 14%, compared to about 3.5% for the latter. These figures, according to Chapman University demographer and fellow Forbes contributor Joel Kotkin, has been particularly notable in metro areas.

“Of the 10 fastest-growing metro areas in the country,” Kotkin writes, “all but two were located in the old Confederacy. Austin ranks first, with 3.0% growth, followed by Orlando, Fla. (2.6%), and Raleigh (2.5%). Other fast-growing southern metro areas included San Antonio, Texas (2.2%); Nashville, Tenn.; and Jacksonville, Fla. (both 2.0%).” Meanwhile, he continues, metros like “Chicago, Pittsburgh, Rochester, Hartford, Cleveland and Buffalo suffered slight losses, while many others, such as St. Louis, Memphis, Milwaukee and Detroit remained essentially stagnant.

 

One big reason is that people wish to escape colder climates. But another is that people are seeking out better climates for governance. Some of the particularly fast-growing states, such as Florida, Georgia and Arizona, have lighter land-use regulations, lower taxes, greater business-friendliness and higher rates of economic freedom than states like New York, Illinois and Rhode Island. Recognizing the lower living costs which result from such openness, domestic U.S. companies and workers alike are flocking to these southern states. So too, increasingly, are immigrants, making the southern metros more diverse than before.

Texas, which doesn’t have a state income tax, is perhaps the prime example. Between 2000 and 2010, it led the 50 states in net population growth by a whopping 27% margin, or nearly a million more people than 2nd-place California. And while growth is not significant throughout the whole state—a third of counties are actually losing population—80% of it occurred in the four biggest metros. Since 2000, Austin, Dallas, Houston and San Antonio have been among America’s 10 fastest-growing metro areas by population, with Austin ranking #1.

Recently I stayed in all four metros, as part of a cross-country trip I’m taking to live in 30 cities over the next three years. The purpose of this trip is to write a book about reforming cities through “Market Urbanism,” which is the intersection of free-market economics with urban issues. The Texas stops were mostly midway through 2016, and I must say, it was exciting to navigate four areas that have become such pronounced centers for growth and urbanization. Each metro, with its potent mix of Millennials, immigrants, entrepreneurs and outside businesses, felt like a snapshot of America’s future.

And yet, there are differences with each, something I recently documented for Forbes. Dallas and Houston are by far the most developed, having grown into America’s 4th and 5th largest metro areas, respectively. They have greater populations, density, ethnic diversity and GDP.

Austin and San Antonio are sooner into their urbanization process, sitting as America’s 33rd and 25th largest metros. But there is even variation between the two. Austin, despite becoming America’s fastest-growing metro by percentage, has been less willing to accommodate this growth, adopting a regulatory climate, namely for housing, that mirrors the northern cities. Thanks to this NIMBYism, Austin’s population growth has outpaced the needed housing stock. This means it has a shortage, and by far the highest median home prices of Texas’ major metros, making it more exclusive to the rich.

San Antonio, meanwhile, has been historically poorer than the others, and maintains the lowest median household income, at $50,502. But like Dallas and Houston, it wishes to address these challenges with economic growth.

“For a good part of its history, San Antonio was a poor city,” said former mayor Henry Cisneros. The political and business establishment has responded by making economic development “the central current of San Antonio’s political discourse and electoral politics…[giving] us the basis on which we decide other questions.”

This strategy is showing results. San Antonio is in the top 10 among major metros for job and population growth since 2000; it is #10 in startup activity, according to the Kauffman Foundation; it is #5 in wage growth, according to Forbes; and it perpetually ranks among the best-performing metros, according to the Milken Institute, even ranking #1 in 2011. It has roughly the same number of housing starts year to year as Austin. Although San Antonio rose as “Military City USA,” it is enjoying an increasingly diverse economy, with health and tourism employing a higher portion of the population, along with gains made in tech, finance and manufacturing.

This growth is producing tangible changes to San Antonio’s cultural and urban fabric. Contrary to popular perception, San Antonio has not historically been an immigrant hub, with a foreign-born population that is lower than the other major Texas cities, much less global ones like L.A. and Miami. The community has generally been stable, with many families moving in after the 1910 Mexican Revolution and never leaving.

But today, the longtime Mexican-American Capital is seeing an inward flood of professional-class ‘Mexican Nationals,’ who settle in northern neighborhoods, and bring substantial spending power. And, mirroring the aforementioned north-to-south U.S. migration shift, there are also many Americans moving into San Antonio. This includes the all-important Millennial demographic, which between 2000 and 2013 grew at a faster rate in San Antonio than anywhere in the nation.

 

This telestrian map by City Journal contributing editor Aaron Renn shows inward and outward migration from San Antonio. Areas shaded in purple are where people move from to enter San Antonio. Areas shaded in brown are where they leave San Antonio to move to.
This telestrian map by City Journal contributing editor Aaron Renn shows inward and outward migration from San Antonio. Areas shaded in purple are where people move from to enter San Antonio. Areas shaded in brown are where they leave San Antonio to move to.

 

The change to the urban fabric, meanwhile, has occurred in both the interior and outlying parts of the city. Extending the famed downtown River Walk north and south seems to have been a good decision by the city, with several urbanist developments sprouting up. But most of the development and population growth has gone up in the fringes, via denser suburbanized development. This isn’t bad even from an urbanist perspective, however, since many of these outlying residents work and shop in the core, creating a more intensive setting throughout San Antonio.

An image by California State University professor Ali Modarres shows most recent San Antonio growth going up in the northern and northwestern fringes of the city.
An image by California State University professor Ali Modarres shows most recent San Antonio growth going up in the northern and northwestern fringes of the city.

In this respect, San Antonio is growing like the other three Texas metros, and seeing the same results—with an economy, a population, and an urban fabric that is increasingly diverse. This won’t stop anytime soon, as foreign conflicts drive immigrants into America, and high prices send them and U.S. natives into places like Texas. If San Antonio—and the state at large—wants to sustain this trend, it must stick to its existing formula. Land-use regulations must remain light and nimble, so that housing remains cheap, and is built where consumers want to buy. Taxes, at state and local level, must remain low, so that Texas can offer cost advantages for companies and workers.  And Texas must keep its economic freedom levels high, which is done by encouraging growth in the private rather than the public sector. These policies enabled such a drastic migration shift to begin with; San Antonio has proven to be one of the lead beneficiaries of the trend.

About The Author
Scott Beyer
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