The pandemic was supposed to be the death of the great American city. The rise of remote work unleashed an exodus to the Sun Belt and suburbs, leaving behind empty subway cars, abandoned offices, and desolate downtowns. Violent crime spiked. Suddenly, so-called superstar cities—such as New York, Boston, and Los Angeles, which boomed throughout the 2010s—were facing what experts called an “urban doom loop.” The more people moved away, the worse things would get; the worse things got, the more people would move away; and so on, in an endless spiral that would do to superstar cities what the decline of the auto industry did to Detroit.
But that hasn’t happened. Twenty-five of America’s 26 largest downtowns have more residents today than they did on the eve of the pandemic. Meanwhile, both violent and property crime plummeted in cities across the country in 2022 and 2023 (Washington, D.C., was a notable exception), and some other threats to public order, such as shoplifting, appear to have been overstated. In fact, the biggest problem that superstar cities face today is the same one that afflicted them before the pandemic: Too many people want to live in them. Housing prices have skyrocketed over the past four years. In New York, Boston, and Los Angeles, vacancy rates are at or near their lowest levels in decades. Even San Francisco, the paragon of post-pandemic urban decline, is doing remarkably well. Last year, its population grew more from net migration than any other city in California, and its crime rate fell. Car break-ins, the symbol of Bay Area decay, declined dramatically in late 2023, according to a San Francisco Chronicle analysis. Homelessness and open-air drug use remain big problems, but they haven’t prompted mass urban flight. Even if things aren’t fully back to normal, the arrow appears to be pointing up.
That’s one interpretation, anyway. The father of the doom-loop hypothesis sees things a little differently. In his view, cities haven’t actually beaten the pandemic death spiral. They simply haven’t experienced it yet.
When Stijn Van Nieuwerburgh, a finance and real-estate professor at Columbia, proposed the doom-loop theory in 2022, he had a very specific sequence in mind.
Step one: The shift to remote and hybrid work causes companies to downsize their offices or eliminate them altogether, leaving the owners of office buildings with a lot of empty space and far fewer potential tenants. This process has already begun; earlier this year, the percentage of vacant office buildings hit an all-time record.
Step two: Office-building owners, now bleeding cash, must either refinance their mortgages—hard to do in a time of high interest rates—or sell. But because of the decreased office-space demand, they will be selling at a discount. This process, too, has begun; prices on even the highest-quality office properties have fallen 35 percent since early 2022 and will likely fall even further in the coming years as pre-pandemic leases continue to expire.
Step three: Because lower property values eventually translate into lower property taxes, local governments will find themselves with huge budget deficits and be forced to cut back on key public services such as policing, transportation, and education. Crime and homelessness will rise, schools will worsen, and public transport will decay. Residents will leave cities in droves, which will further erode the city’s tax base and public services in a vicious cycle. This part hasn’t happened—yet. “We’re only in the first inning right now,” Van Nieuwerburgh told me. “Things are going to get much, much worse.”
Van Nieuwerburgh’s theory, and thus the fate of America’s cities, depends on two core assumptions. The first is political. City governments could theoretically make up for lost commercial-property revenue by raising taxes instead of cutting key services. But Van Nieuwerburgh argues that, in practice, the fear of political backlash will prevent city leaders from doing so. Even if they did, such a move could encourage residents and businesses to leave the city, generating its own doom-loop dynamic.
Other experts disagree. The urban economist Edward Glaeser told me that many cities raised taxes considerably to strengthen their police forces in response to the crime wave of the 1980s and ’90s without hemorrhaging residents. Both views are plausible, and the outcome will likely vary by city; New York, for example, receives just about 10 percent of its revenue from commercial properties, whereas Boston receives about 36 percent. But it is telling that local leaders in places such as New York and San Francisco are dealing with current deficits by shrinking their…
Read More: The Urban Doom Loop Hasn’t Happened—Yet