Where People Are Moving – And Where You Should Buy Real Estate Investment Property
The states with the fastest-growing populations are Texas, Florida, and the Carolinas, respectively. While the cost of living in these states continues to rise, New York and California rank dead bottom.
Inflation and growing house prices in major cities put a strain on the economy of the United States. They are looking for sanctuary in places like Florida and Texas, as well as the Carolinas, which have mild weather, reduced living costs, and many employment possibilities. The National Association of Realtors (NAR) examined census data to determine which states saw a loss of inhabitants in 2022 and which experienced population growth. The patterns make it evident that many Americans are migrating as a direct reaction to worries around cost.
Migration Patterns Are Changing Across the World
Even when remaining in the exact location is no longer financially feasible, the choice to relocate is rarely straightforward. Even though the epidemic allowed more people in the United States to work from home and fueled the desire for more space, these factors only resulted in a minor increase in domestic migration, which has been in steady decline for decades. According to The Brookings Institution’s findings, the domestic migration rate reached a record low in 2022. Almost twenty percent of Americans relocated each year throughout the decades after World War II. This is because the United States had a young generation with a higher percentage of renters and a higher percentage of single-earner households, which made it simpler for families to pack up and relocate in order to take advantage of new employment opportunities. Migration rates dropped to between 13% and 14% by the beginning of the 2000s, and the Great Recession made the decline in migration much more pronounced. The second half of 2022 saw rising mortgage rates, which made moving further away an even less attractive option. During the pandemic, homeowners who could lock in low-interest rates on their mortgages could avoid foreclosure. The homebuying boom did not encourage people to relocate. In addition, according to Pew Research, the trend toward urbanization is reversing itself because fewer people are moving into metropolitan regions where rents have quickly increased.
Nonetheless, although international migration is decreasing, movement across longer distances is picking up pace. In the years 2021 and 2022, there was an increase in migration between states and counties. Longer-distance movements indicate trends in forced early retirement and voluntary job-quitting tendencies that were prominent during this period. Both of these trends became more widespread during this time. Many took advantage of these changes to move to other states hoping to find better work or housing that was more inexpensive.
Where Are People Moving?
The six states that saw the most population growth in 2022 were Florida (+1.9%), Texas (+1.6%), North Carolina (+1.3%), South Carolina (+1.7%), Tennessee (+1.2%), and Georgia (+1.2%). Florida had the highest percentage of new residents, followed by Texas, North Carolina, South Carolina, and Tennessee. In addition to those states, Arizona, Idaho, Alabama, Oklahoma, and Nevada ranked high on the list of those receiving the newest residents.
The Tax Foundation suggests that one of the selling points may have been the relatively low tax rate. However, those cost advantages will likely be outweighed by the potential reduction in monthly mortgage or rental payments that new residents of these states may experience, particularly those moving here from significant metropolitan areas such as New York. According to the Fiscal Policy Institute findings, the typical family that moves out of New York saves 15 times more money in housing expenses than they do in taxes.
The NAR also analyzed data from the USPS to determine migration patterns between metropolitan regions. Cities in the South and the West also had the highest rates of people migrating outside the country.
The following are some of the regions that saw the most significant amount of population growth:
- Ocala, Florida
- Savannah, Georgia
- Tallahassee, Florida
- Deltona, Florida
- Charlotte, North Carolina
- Miami, Florida
- Huntsville, Alabama
- Houston, Texas
- McAllen, Texas
- The coastal town of Myrtle Beach in South Carolina
According to the NAR, these Sun Belt regions witnessed a swift rebound in employment opportunities during the pandemic. In these regions, around five percent more employment is available on average than in March 2020.
Where are people heading when they leave?
People in the United States are fleeing areas with high housing prices, high tax rates, and/or sluggish employment growth because they are moving to states in the South and West, where housing is more affordable. During the year 2022, the states of California (-0.3%), New York (-0.9%), Illinois (-0.8%), New Jersey (-0.1%), and Massachusetts (0.1%) saw the most significant loss in population. Although some of these states have stunning metropolitan centres with real estate values, some of these areas were sluggish to recover following the pandemic.
The typical selling price for a real estate investment property in San Francisco is now $1.275 million. For instance, as of July 2022, just one metropolitan region in Illinois has completely recovered from the employment losses caused by COVID-19, while the state has only regained 86% of lost jobs.
Moving Due to Housing Concerns Becoming an Even More Frequent Occurrence
Moving for a better job or school opportunity has historically been the second most common reason. They opt for areas with better communities, more significant amounts of space, and lower housing costs. However, statistics from the Census suggest that relocations for reasons linked to housing have grown even more prevalent during the epidemic. In contrast, the percentage of persons relocating for reasons connected to their families or jobs has somewhat decreased. In 2021, 46% of Americans relocated for reasons linked to housing, representing a six percentage point increase from the previous year. Migration is taking place by an all-time low number of individuals right now. However, those who are moving are heading in a more distant direction.
People are still looking for cheap housing in large cities, traditionally the most attractive locations. As a result, population expansion occurs more often in the southern and western regions of the country. Eventually, there will be a higher demand for property in these locations, which will lead to a rise in house prices; thus, investors may research migration patterns to locate places that have the potential to expand in the future.
