Is Migration Away From Urban Areas A Trend Or Here To Stay?


With Americans working from home since the start of the COVID-19 pandemic, some densely populated areas of the United States are losing residents as people move to the suburbs to escape city life, and those watching this trend say landlords shouldn’t hold their breath hoping a younger generation of renters will replace them.

Elizabeth Rose of Mortgage 300 in Dallas, Texas, says there are a variety of reasons why people are moving out of big cities and isn’t sure if this migration to the suburbs and rural areas will continue after the pandemic ends.

“We are seeing a trend in my area of people moving outward and there are a few factors driving this,” Rose said in an interview for The Mortgage Note. “People are looking to change or improve their living situation based on working from home. Many people are working from their kitchen table because they don’t have home office space. They are looking for housing that can offer that. Of they have been living in a city for work and find they don’t have to commute anymore and are seeking a home with a backyard or something like that.”

Rose added on top of people looking to move to the suburbs, a new group of buyers are coming of age. Younger people starting families are looking to establish homes and that is influencing the markets in suburban areas as well. She said that is starting a new trend in the suburbs and household formation over the next few years will likely be greater than has been seen in the past because of the age group feeding it. This is aided by incentives for first-time homebuyers.

This is not likely to drive prices down in urban areas because home construction companies are not building at the volume they were before the pandemic.

Rising costs for labor and building materials, combined with having a backlog of people ready to buy, means demand is outrunning supply on almost every level of the housing market.

“I don’t think we’ll see production pick up necessarily and in my area (Dallas) it has slowed down drastically,” said Rose. “For some people, they will run into a tightness of inventory, and it is going to be tough.”

One thing the Dallas suburbs are seeing that is new to the market is a growth in townhouse construction, according to Rose.

“We have no condos, but what we are starting to see is townhomes. However, the cost of a townhome is at or greater than the cost of a single-family home and quite often come with higher HOAs (Homeowners Association Fees),” she said. “I think townhomes are for people who want a lock-and-go life.”

Rose points out that there is still a lot of commercial construction going on in the metropolitan regions of Texas.

Dr. Roy Black is a Professor in the Practice of Finance at Emory University’s Goizueta Business School. He pointed out there are several levels of migration happening for various reasons all at once.

“There is a net migration being caused by fewer people moving into cities,” said Black. “But a steady rise of people moving into suburb cities. It is a combination of some people not moving in and some people moving out. So you see the suburbs gaining the most people and inner cities losing the most.”

Black added that another factor feeding the trend is people have more money now than they had pre-pandemic.

“Now we see that during the pandemic people began stockpiling cash,” he said. “People were sheltering in place, businesses were closed so there were fewer places to spend money, therefore people spent less. Now they have cash for down payments on houses that now cost more because of rising building costs,” Black said.

So what started the migration and what is feeding it the most?

“The first wave of people moving out was fear of contact with other people,” Black said. “People who left or are leaving are not returning because of high costs to live in the city. Some cities are being affected differently by this. San Francisco and New York City were hit hard, especially in the office sector. This could in turn drive leasing costs down. However, Atlanta is doing well and in other parts of the Sunbelt commercial construction and sales are doing well. Austin is doing great and construction and sales are booming,” Black said.

How will the migration and cost situation look for 2022?

“That is hard to say,” Black said. “It is tough to say if there will be a further migration. There are too many unknowns. Will there be another variant? If so, will people lockdown again? Right now there are just too many unknown variables for people to project an accurate trend picture.”

Read more: It is being reported that Millennials are choosing to buy single-family houses with their friends.