Lots of people kind of having that feeling this is a biggest urban cluster outside of California, but they are not very sure why the future potential price appreciation will be fundamentally stronger than new and fast growing areas like Georgia, NC, Texas.

What’s the prime and frontal reason for NJ/NY/DC/MD/VA ? Zoning difficulties !!

Within about 3 hours driving distance, this area is the most densely populated area. However, this area had also been developed at least 100 years earlier than sparsely populated new growth area like South-eastern states, South-western states (Sun-belt). Due to the early development, this area is approaching to complete built-out (terms in land development to indicate no new land supply situation). This land shortage will force future development into infill development. In other word, new developments will come from tearing down older communities to make space for new developments. This infill future will have one future: Higher land cost and subsequently higher property cost.

A lot of people automatically thought that newer regions like NC, GA, TX are having faster population growth, then these regions will have faster home price appreciation. No, that’s a wrong logic. The reality is, newer region has far less population density and far more zonable land for new developments. Despite a higher in-migration from other places (mostly whites), cheap land and plenty of space will put a long-term cap on price appreciation. This situation will change for at least 50 years until a critical mass threshold is reached to trigger the same kind of growth that’s going to be experienced in densely populated and highly developed region.

This critical mass threshold of built-out land and continuing population growth will start to accelerate property price growth in the North-east to Mid-Atlantic region for the next 50 years. That’s why DC region’s CRA researchers are predicting 50 times price increase in next 30 years. Toll Brothers’ Bob Toll also expressed that the future growth rate will be stronger than in the past, might accelerate into a state of being much like today’s England.

The same situation will happen along the California corridor from Santa Rosa all the way to San Diego. California is reaching the same critical mass threshold, yet with population increase unabated, thanks to mostly immigrants from other countries. Same as California, Boston -> NY -> NJ -> DC/MD/VA is currently getting very Californianized with more and more immigrants arriving from everywhere.