Sustained housing price appreciation could also exert increasingly selective pressure on the kinds of jobs that are feasible to maintain in the expensive metros. Employers who wish to stay in business cannot afford to pay workers a wage that exceeds their contribution to revenue. As a result, employers in the expensive coastal metros would be compelled to maintain only the most productive roles–those which justify wages high enough to compensate for local housing costs–and other types of work would either be foregone, automated, or relocated.
The expensive coastal metros currently lead the U.S. economy. Although the most crucial roles in these cities would be the last to go anywhere, sustained housing price appreciation could nevertheless threaten these metros’ standing. As housing costs increase, the productivity threshold beneath which jobs could no longer remain in these metros would gradually rise, sending workers from ever-higher up the value chain to concentrate elsewhere. As a result, other metro areas’ odds of achieving critical mass for viable new industrial clusters would rise, and ultimately threaten the expensive coastal metros’ lead.
The expensive coastal metros could avoid this scenario by providing sufficient new housing to curb housing price appreciation. It is ironic that these metros are risking their economic future by not doing so, only for the sake of protecting incumbent homeowners from change.
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