MARCUS: There is no 'rural revival' in Indiana

June 19, 2010

The now famous housing bubble has been blamed for many of our nation’s problems. In truth, it is the opposite. The massive private debt, including mortgage debt, was made possible by lax lending practices. This facilitated the housing boom.

It was not the desires of individuals to own new homes that caused Congress to relax regulation of financial markets and to encourage more lending for housing. It was the financial and housing lobbies that pressed for policies that enriched their industries.

One consequence of all the housing construction between 2000 and 2008 is a continuation, perhaps intensification, of a dual trend: People are moving to metropolitan areas faster than to other areas of Indiana, while within metro areas they are moving away from the established central cities.

Indiana has 14 metropolitan statistical areas (MSAs), excluding the Indiana portions of the Cincinnati and Louisville areas. These 14 areas grew 6.4 percent in population between 2000 and 2008. At the same time, the whole state grew 4.9 percent. The 25 Indiana “micropolitan” areas (single counties outside metro areas with populations ranging from Scott’s 23,000 to Kosciusko’s 76,000) showed no growth. The rural counties that were neither in metro- nor micropolitan areas grew only 1.3 percent. This is hardly the much-heralded “rural renaissance” advanced by some analysts.

Now let’s look at the central cities of these areas. Some MSAs have two or more central cities (such as South Bend-Mishawaka), but most have only one. In the aggregate, these 14 metro areas grew 6.4 percent, with their central cities growing only 0.4 percent. The balance of those metro areas (smaller cities and towns plus suburban regions) grew 12 percent.

Indianapolis-Carmel and Elkhart-Goshen each grew 3.6 percent, while their outlying areas advanced 24 percent and 14 percent, respectively. Only four metro areas lost population; the Terre Haute MSA was one of these, but, against the general trend, its population loss was entirely outside its central city.  

Together, the 25 micropolitan areas had no growth in population and their central cities declined 1.5 percent, while the balance of those counties grew 0.7 percent. Within this group, however, there were considerable differences. Jasper and Plymouth each grew faster than the balance of their growing counties. Richmond, Wabash and Connersville each declined faster than the rest of their respective declining counties.

What are these data telling us? Hoosiers want to live in metropolitan areas, but they don’t want to be in the central cities of those areas. They want the smaller cities and towns of those metro areas, many of which offer only the disconnected lifestyle of suburbia with the liabilities of large lawns and total dependence on the automobile. Hoosiers seem to reject as well the older, smaller towns that form the cores of micropolitan areas.

The housing boom, focused on owner-occupied housing, encouraged already ongoing urban sprawl. The question for this generation is: “Will we restructure our thinking about the location of housing in light of the economic, environmental and energy problems we now face?”

The solutions are in the hands of those who control land use, but they will not come forth until citizens rethink how we live.•


Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.


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