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Suburban Poverty Is Growing—and It’s Affecting Housing Markets

Poverty is something most Americans don’t like to think much about—unless they’re struggling to rise out of it. When they do focus on it, images of rural shacks or dilapidated neighborhoods in crime-ridden cities usually come to mind.

Except that’s no longer quite so accurate.

Instead, poverty has increased the most in the nation’s suburbs and exurbs. The numbers tell the rather startling story: High-poverty neighborhoods shot up 76% in the suburbs and 123% in the exurbs (farther-out suburbs on the edges of metros) from 2000 to 2015, according to an analysis from Apartment List. The rental website analyzed a recent Harvard University’s Joint Center for Housing Studies report.

The reason: “It’s gotten too expensive to live in the core cities, so people are moving out to the suburbs,” says Andrew Woo, Apartment List’s director of data science. And many are bringing their financial challenges with them to their new nonurban life.

“Poverty is spreading and concentrating in high-poverty neighborhoods. … It causes property values to fall. It tends to shift [communities] more from ownership to rentals.”

The problem is nationwide. The number of people living under the federal poverty line skyrocketed 41% from 2000 to 2015 as the financial crisis and the ensuing recession raged on to reach 47.7 million people, according to the Harvard report. The number of high-poverty neighborhoods (where the poverty rate is 20% or higher) also jumped 59%. That means that about 54% of the poorest Americans now live in high-poverty areas.

Will poverty stop rising in the suburbs?

Only about a third of the poorest people live in cities, according to the Harvard report. That’s partly because many of them are getting pushed out by steadily rising prices due to gentrification. So they head farther out, where there isn’t much lower-priced housing and not nearly enough good-paying jobs for workers without college degrees or skilled trades.

And the farther they go, the fewer jobs, public transportation options, and services there are to help them. Housing might be cheaper, but maintaining a car and driving to and from work each day can cost a pretty penny. That’s why in the exurbs, the number of poor neighborhoods more than doubled from 2000 to 2015, according to the Harvard report.

“Many suburban areas are experiencing significant growth in home prices, but the growth has been uneven,” says Dan McCue, a senior research associate at Harvard’s Joint Center for Housing Studies. “It’s not the leafy suburbs where we’re seeing the growth in poverty. It’s the areas that are left behind [and farther away from cities] that are less desirable.”

It stands as a vicious cycle. More poor residents means the neighborhood is likely to be predominantly rentals; renters are less likely to be invested in improving their communities; and more residents with less money can hurt local businesses if they can’t support them, and that means fewer local jobs.

And all this leads to home prices falling, which reduces the property taxes that these municipalities can collect. And then there’s less money available for schools, law enforcement, public transportation, and social services just when residents need them the most and crime is most likely to rise.

Where is poverty rising the most?

Regionally, the Rust Belt and the Southeast experienced the biggest jump in the number of poor neighborhoods, according to the Apartment List analysis.

“The South and the Rust Belt have seen pretty anemic wage growth over the past 15 years” as many manufacturing jobs have been moved overseas, says Apartment List’s Woo. “In the coastal cities, like New York and San Francisco, residents face increasing housing costs but … they have stronger job markets with better-paying jobs.”

The increase in the number of poor, suburban neighborhoods was greatest in Atlanta and Dallas, according to Apartment List. They were followed by Detroit; Charlotte, NC; Riverside, CA; Chicago; Tampa, FL; Houston; Orlando, FL; and Indianapolis.

“There isn’t a rush of people wanting to move to these areas,” Woo says of the far-flung suburbs and exurbs of these cities. “There is a pretty ready supply of homes available. The challenge there is are there good enough jobs there for people living there to afford those homes?”

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