Bank of America Institute recently released an analysis that finds net flows of domestic migration (people moving within the United States) continue to follow pandemic trends. BofA internal data, which leads the Census Bureau population data by almost a year, found that as of the first quarter of 2023, cities that saw a large influx of people during the pandemic are still growing faster than other cities in recent quarters, but housing prices are weakening even in cities with growing populations.
Among the major metropolitan statistical areas (MSAs), Austin saw the largest net inflow of population both during 2020-2021 – with +5% – and over the past four quarters (+1.5%). Also high on the list are Tampa and Orlando, both with a net increase of +0.8% between the first quarter of 2022 and 2023.
Interestingly, while Phoenix and Las Vegas saw strong increases in population during the first two years of the pandemic, the pace of growth has slowed noticeably in recent quarters, up just 0.3% and 0.2% year-over-year (YoY), respectively, in the first quarter of 2023.
Alternatively, cities such as San Jose, San Francisco and New York saw the biggest outflow of people during the early years of the pandemic and the rate of decline in 2023 continues to be the highest among major MSAs.
While large population inflows usually increase both home and rental prices, data from Freddie Mac shows that even in cities with growing populations, including Austin, home prices are slowing rapidly.
In contrast, rental prices remain strong in cities with positive inflow of residents. In April 2023, median rent payments for BofA customers in Austin, Orlando and Tampa were up 11%, 14% and 14% YoY, respectively. This compares to the national average of 8% and just 3% for San Francisco.
“Domestic migration continues to be a key theme shaping the housing market,” says Anna Zhou, economist for Bank of America Institute. “While rising interest rates are dampening home-buying demand in the near term, the housing market in cities where Millennials and Baby Boomers are moving could see strength in the longer term as the former enter prime home-buying age and the latter downsize their houses.”
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