Migration, Inflation, and Why Big Cities Are Losing Their “Desirable” Status

Abstract

Once you change the picture to look at: okay, what's the typical buyer's income in the market today or in this year? and you factor in the inward migration into an area, the home price growth that looks exuberant from local incomes actually starts to look a little bit more rational, when you think about how much money these households are able to come in with, coupled with more space for a home office and more demand for real estate generally, alongside more investor activity. Our latest data, just from last month, still shows the continued pace of migration out of more expensive areas into more affordable areas. For a lot of households that are looking to relocate, maybe take a new job, they might be more incentivized, I guess, as rates do rise, to still make that move to somewhere that's more affordable. During the pandemic it was more than triple that, at 182,000 more people left the Bay Area than moved to the Bay Area. If you think about people leaving urban walkable areas like Seattle, the Bay Area, LA, New York and moving to these more suburban car-dependent areas, that creates a lot more demand for things like a second car for a household, and even gas as they are driving more. Some people might not want to move where it's more affordable and more conservative, where land is more plentiful. Are you seeing in the data that that's impacting the market, where maybe home prices are coming down in those areas because there's more people leaving than coming there? These really, really expensive markets, are they getting a little more affordable? Taylor: So, relatively speaking, home prices have not appreciated as much in these areas that are losing a lot of residents.