The Bank of America Institute recently released an analysis showing that net flows of domestic migration (people moving within the United States) continue to follow pandemic trends. BofA internal data, which is nearly a year ahead of the Census Bureau’s population data, found that cities that experienced large influxes of people during the pandemic are still growing faster than other cities in recent quarters as of the first quarter of 2023 , but residential construction Even in cities with growing populations, prices are falling.
Among the major metropolitan statistical areas (MSAs), Austin saw the largest net inflow of population in both 2020-2021 – up +5% – and over the past four quarters (+1.5%). Also high on the list are Tampa and Orlando, both with +0.8% net growth between the first quarters of 2022 and 2023.
Interestingly, while Phoenix and Las Vegas experienced strong population growth during the first two years of the pandemic, the pace of growth has slowed noticeably in recent quarters, increasing by just 0.3% and 0.2% year-on-year (yoy), respectively . in the first quarter of 2023.
Cities like San Jose, San Francisco, and New York, on the other hand, experienced the greatest emigration in the early years of the pandemic, and the rate of decline in 2023 remains the highest among major MSAs.
While large population influx typically drives both home and rental prices higher, data from Freddie Mac shows that even in cities with growing populations, including Austin, home prices are falling rapidly.
In contrast, in cities with positive inflows, rents remain high. In April 2023, average year-over-year rental payments for BofA customers in Austin, Orlando, and Tampa increased 11%, 14%, and 14%, respectively. This compares to the national average of 8% and just 3% for San Francisco.
“Domestic migration continues to be a key issue shaping the real estate market,” said Anna Zhou, an economist at the Bank of America Institute. “While rising interest rates dampen home demand in the short term, the housing market in cities where millennials and baby boomers are moving could see strength in the longer term as the former enter the prime homebuying age and the latter downsize their homes.”
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