August Comte, the respected mathematician and philosopher, considered by some as the father of modern sociology, coined the phrase “demographics is destiny”. Although only partially true, it’s important to know the demographic nature of an area for every real estate investor. A key component of demographics is net migration.
Net migration is in-migration minus out-migration – or people moving in minus people moving out. Net migration matters because it affects the value of investors’ potential gains or losses.
Two questions are addressed here: Which metropolitan areas (MSAs) have seen the strongest net migration in recent years? Second, which MSAs are likely to see the highest net migration over the next decade?
What’s happened so far
Here’s a look at the top ten destination areas for movers in 2019. The top 10 were the Phoenix area (+78k), the Dallas area (+68k), the Austin, TX area (+47k), the Atlanta area (+44k), the Tampa, FL area (+42k), the Houston area (+38k), the Charlotte area (+33k), the Las Vegas area (+31k), the Seattle area (+25k), and the San Antonio area (+24k).
The top 10 list for 2019 is not what the net migration picture was from 1970 to 2020. From 1970 to 2020, Miami was the top destination at almost 3 million people. The remaining members of the top 10 destination places for setting up permanent residence included the Dallas area (+2.8 million), the Phoenix area (+2.6 million), the Houston area (+2.3 million), the Riverside area (+2.2 million), the Atlanta area (+2.1 million), the Tampa area (+2.0 million), the Orlando area (+1.6 million), the Las Vegas area (+1.6 million), and the Austin area (+1.3 million).
Interestingly, 7 of the top 10 for 2019 were also on the top 10 list for net migration covering the past 50 years.
Here’s a geographic look at the movement of people in 2019. In red are areas that lost people. The darker the green, the more people moved to the area. As is well-known, people moved from the high tax/regulatory areas such as California/New York, and the tough-economy areas like the Rust Belt.
Net migration to 2030
Now, to the issue that matters. Where is net migration going over the next decade? If picked correctly, it could make a difference of up to 50% or more in the value of one’s real estate investment over the next decade.
According to analysts at Moody’s, population growth – and the net migration feeding into the population growth – will be strongest in five states – Florida, Arizona, Texas, Washington, and Utah.
Places where people are likely to leave over the coming decade include New York and the other northeastern states, the Rust Belt, the northern rural states, and pockets in the south (New Mexico, Mississippi, Louisiana, Alabama).
What does this mean? Consider carefully the net migration picture before making any investment picture. It is definitely not the only thing to consider, but net migration matters, and matters a lot.
When thinking about investing, always consider the net migration picture over the long term. It will affect the value of every real estate investment.