April 3, 2008

US Migration - Victim Of The Housing Market

Over the past 30 years Americans have gotten ahead by moving to a new city/region. Most of the cities losing people have been the 'Rust Belt', those cities gaining have been in the 'Sun Belt'. Just last week the US Census Bureau reported that Dallas-Fort Worth had more people move to it over the past year than any other city.

To the left is a graphic (from CNNMoney.com) listing the top ten metro areas with the biggest population growth in the US. Of the top ten cities, eight are in the 'Sunbelt'. From CNNMoney:

The Sunbelt is the fastest growing part of the country because in large part thanks to its lower cost of living - from housing and groceries to taxes. The region has been one of the fastest growing for years now, says Frey and, "growth breeds more growth." As more people move to an area, there is increasing demand for goods and services, which creates more jobs.

Frey expects to see growth continue in the Southeast - expanding further into the less developed parts of South Carolina and Tennessee - and into the West, particularly in the interior parts of California, Arizona, and Colorado.

The U.S. Census bureau grouped counties into 363 metropolitan areas across the country. Those metropolitan areas contained 251.9 million people, or 83.5% of the nation's population.

While the actual number of people moving specifically for job related reasons is not known, one can assume that most of the movement is due to people wanting to improve their quality of life. Why stay in cold and snowy Michigan as an auto worker, when you could move to sunny California and work as a mortgage broker. (Both people might be out of a job, but at least its nicer weather in California.)

Impact Of Housing Market

The migration numbers for 2007 were a 27% drop from the numbers in 2006. The New York Times reports:

With homes changing hands easily in a booming market, interstate migration reached 2.2 million people in 2006, excluding the effects of Hurricane Katrina. As the economy and home prices began to unravel in 2007, however, interstate migration plunged to 1.6 million people.

One of the biggest problems is that when people move to another city, they are having a hard time selling their older home. The idea of having to carry two mortgage payments for six months to a year is so daunting that it is making people reluctant to move. The NY Times article noted some employers are finding '...employees reluctant to move, even for a raise and a promotion.'

If people do make the move, sometimes families are split up. The spouse with the new job will move onto the new city while the other spouse (and kids) stay behind to watch over the old house. This scenario has got to put the family under a certain amount of stress.

The problems in the housing market are also preventing older retired people from selling their home. They have spent most of their life in the house and are reluctant to sell it for less than they think that it is worth. This prevents them from downsizing their home, moving to an assisted living homes, or moving to sunny Florida.

Cost of Lost Opportunities

What will the impact to the economy be due to by people not moving because they can not sell their home? I imagine that the long term impact will be minimal, especially compared to all of the financial loses. But what about the intangible things like happiness and quality of life?

Source:
'Unsold Homes Tie Down Would-Be Transplants', by Louis Uchitelle, NY Times
'
Dallas-Fort Worth tops population growth', by Catheine Clifford, CNNMoney.com

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