Migration to Hot Housing Markets Cools Off

March 21, 2008

Migration to America’s fastest-growing areas has tapered off in the last year, newly released Census data show. The slowdown is sharpest in places where growth was fueled in large part by the decade’s hot housing market—Florida, the Mountain West and ex-urban counties.

At the same time, the formerly foot-loose residents of coastal California, Northeast and Midwest cities and inner suburbs are mostly staying put. This “migration correction” is a response to the housing market correction that has kept would-be buyers from locating to previously hot areas, and in many cases, keeping them from selling existing homes in the established locales.

According to an analysis of the Census Bureau’s annual population estimates through July 2007, while the fastest growth continues to occur in the South and West regions, that growth has stalled in the last year. Among the 25 large counties which grew most rapidly since 2000, 23 showed lower growth rates last year than the prior year. (View Table A) Many are located in Florida, which has been particularly hard hit by the recent housing crises, a broader economic downturn and hurricane concerns. The state’s annual in migration plunged to 35,000 in the past year, in comparison to an average 230,000 per year for the previous three years.. And while the slowdown in population gains were most pronounced in counties located in hot markets like Orlando and Tampa, they were pervasive in almost all parts of the state. Metro Fort Lauderdale’s Broward County registered an actual decline in its population for the first time in history and Miami’s growth was reduced to half of the previous year.

The Mountain West, along with interior California, also took significant hits in their earlier high growth rates. (View Chart) While Phoenix’s Maricopa County still led the nation by gaining 101,000 people in the last year, this gain is down from 132, 000 in 2005-6, and 142, 000 the prior year. Noticeable growth cutbacks are evident in Las Vegas’ Clark County, as well as Riverside and San Bernardino counties in California’s “inland empire”. (View Table B) The latter county, a popular destination for San Diegans in search of more affordable housing, registered a net domestic out migration in the past year. The growth in this suburban destination is now totally dependent on immigration and natural increase.

These growth slowdowns are only half of the story. In fact, California illustrates both halves. While the state’s interior San Bernardino and Riverside counties are receiving fewer migrants than in previous years, coastal California counties, San Diego, Orange, Los Angeles – major migration feeder areas for inland empire- lost fewer migrants, and gained more people than before. During each of the bubble years of 2003-06, San Diego lost more than 35,000 migrants. This fell to just 14,000 in 2006-7 as many potential migrants decided to hold tight.

Aside from coastal California, many other counties showed greater gains, or reduced losses between 2005-6 and 2006-7 in a way that is also linked to the fewer housing opportunities. Such is the case for a slew of city or inner suburban counties, including Cook County, Ill, in the Chicago metropolitan area, Middlesex Co, NJ, in the New York metropolitan area, Hennepin County, MN in the Minneapolis-St Paul metropolitan area, and Philadelphia County. (View Table C) At the same time, exurban counties in these and other metropolitan areas, including metro Washington DC, showed reduced growth from previous years as the housing market cooled off.

So we have a year when the extremes are being reined in. Would-be homebuyers in previously hot housing markets are unable to obtain the homes they desire, leaving them in limbo – in many cases stranded from promising opportunities or amenity-rich retirement living. Yet more stagnant or expensive parts of the country, be they northern cities or coastal areas, are enjoying a windfall by retaining more of their residents, including renters, new families andempty nest retirees until at least both the housing and migration markets clear.

View Charts and Tables:
Annual Growth Chart
Table A
Table B
Table C