New York still has an amazing concentration of talent. That talent is more effective because all those smart people are connected because of the city’s extreme population density levels. Historically, human capital — the education and skills of a work force — predicts which cities are able to reinvent themselves and which ones are not. Those people who are continuing to pay high prices for Manhattan real estate are implicitly betting that New York’s human capital will continue to come up with new ways of reinventing the city.
In that light, I think one could say the same thing about Pittsburgh. How else do you explain the relatively robust real estate market? Another thing Pittsburgh has going for it, its density. The hills and rivers help to force human capital into a small area.
Missing from Glaeser's simple but powerful NYC story is immigration. Pittsburgh desperately needs an immigrant attraction strategy like the one in Halifax, Nova Scotia (hat tip Richard Herman). The idea is to encourage even greater density and to reverse the population decline in the City of Pittsburgh.
Update: Another resiliency data point:
Pittsburgh’s residential real estate market isn’t the only one bucking the nationwide downward trend.
The area’s commercial real estate market outranked every other major metropolitan area in the country in the fourth quarter of last year, according to a recent report from credit rating agency Moody’s Investors Service.