ABSTRACT
While there can be little doubt that the Sunbelt boomed in the decades after World War II, the causes of this boom are less clear. In section 2, we discuss three broad possible explanations for the success of the South and the Sunbelt: increasing productivity, rising demand for Sunbelt amenities, and a more flexible housing supply. Many authors, from McDonald (1961) to Caselli and Coleman (2001), have documented the remarkable economic performance of the South during the post-war era and have suggested that strong economic growth should lead to population growth. Other authors have proposed that population growth in the Sunbelt reflects increasing demand for Southern amenities due to sunrelated technological change, such as the rise of air conditioning (Borts and Stein 1964; Graves 1980; Mueser and Graves 1995). A final hypothesis is that the South has grown not because it is more attractive or more productive, but because its housing supply is far more elastic, mainly due to a pro-development regulatory system (Glaeser et al. 2006). Section 3 presents a framework based on Rosen (1979) and Roback (1982) that uses changes in population, income, and housing prices to assess the potential sources for Southern and Sunbelt growth. The model predicts that rising productivity will cause population, nominal income, and housing prices to rise. When productivity increases, income will rise faster than housing prices, and real incomes, defined as nominal income corrected for local prices, will also
surge. Rising amenity levels or an increasing willingness to pay for the amenities of a location will cause population and housing prices to rise, but nominal and real incomes will fall.1 An increase in housing supply will cause population to rise and both income and housing prices to fall. This framework enables us to estimate the relative growth of productivity, amenities, and housing supply in the Sunbelt, along with the relative contribution of these forces to the growth of the region. The framework depends critically on the spatial equilibrium assumption that assumes that different “real incomes” across space offset different amenity levels. The most problematic aspect of our application of the Rosen-Roback spatial equilibrium framework is that we ignore the forward-looking aspects of housing prices, but we hope that future work will remedy this weakness. In Section 4, we estimate the relationship between our proxies for Sunbelt status and the growth of population, income, and housing. Since the changes in the quality of the housing stock in the South appear to be enormous, we use only the areas for which we have Office of Federal Housing Enterprise Oversight (OFHEO) repeat sales indices from 1980 onward. This limits our sample to 135 metropolitan areas and, as a result, our results differ from the correlations in Table 3.1, which includes all U.S. counties. We use census median housing values for years before 1980. In univariate regressions across metropolitan areas, each of these variables predicts population growth in every decade since 1950, except for July temperature, indicating hot summers, which demonstrates almost no effect in the 1960s.
