I live in New Jersey. One of the states people are most likely to leave to go south. The taxes are high, the highways around me are a convoluted mess, and the winters are a drag. I grew up in Virginia; I get the appeal of going south. Owning real estate in the "sun belt" has probably been one of the greatest money-making opportunities of the past twenty or thirty years. And Covid, and the rise of remote work, has only accelerated all of that.
Or has it? The San Francisco Fed just put out a new study suggesting that it could be the "End of an Era" for the snow-belt-to-sun-belt migration which has been the distinctive feature of U.S. population shifts over the past 50 years. Their argument? The South is getting too hot.
It may sound like a reach, but their data on population shifts is worth considering. It shows many more parts of the sun belt losing population from 2010 through 2020 than in prior decades. Places in particular like Western Texas and Louisiana. (Although Florida--experiencing an influx of New Yorkers in recent years--remains an exception.)
"The U.S. population is starting to migrate away from areas increasingly exposed to extreme heat days," the researchers write, "toward historically colder areas, which are becoming more attractive as extreme cold days become increasingly rare." Cities like Baton Rouge, Jackson (Mississippi), Shreveport, Garland (Texas); and Long Beach (California) stand out as seeing population declines both pre- and post-pandemic, according to Census figures.
Even Phoenix's population growth has been slowing. By last year, it grew just 0.4%--a quarter of the growth rate it enjoyed pre-pandemic. Houston saw big declines in 2021.
I asked noted real estate analyst Ivy Zelman about this on the show yesterday. "I do agree that could happen," she said of the population shifting "back north." She added that moving data already show a a "double-digit decline" in the number of households moving to the sunbelt last year, and said the rising number of storms down south is showing up anecdotally as a frustration point.
The Midwest could be a big beneficiary of a re-shift, she added. "Markets that are more affordable, that are enjoying 80-degree summers while other people are boiling, might become a lot more attractive"--like Cleveland, she said, which could be one market in particular to watch.
Money Report
On top of the heat and storms, sun belt populations are also grappling with issues like soaring home insurance premiums (in Florida), or flood insurance premiums (in Louisiana). Real estate prices have also risen significantly in recent years, negating a big part of the cost savings in relocating from the north. A friend of mine in town whose company is based in Charlotte is resisting moving there for that reason. "The houses are practically more expensive down there than they are here!" she told me.
And you know what? New Jersey is lovely, actually. The towns are small and walkable. Errands are all pretty close. The hospital I had my kids at was seven minutes away. Some towns even pick up your trash from the backyard! And being close to Manhattan is a pretty nice perk. Last year was the first year since 2010 that the state actually saw positive net migration.
Feeling out of the loop? We'll catch you up on the Chicago news you need to know. Sign up for the weekly Chicago Catch-Up newsletter.
If by some twist of fate this continues, parts of the country that were previously left for dead might be the biggest economic beneficiaries in years to come.
See you at 1 p.m!
Kelly
Click HERE to sign up for this newsletter in one easy step.
To hear this as a podcast, subscribe to "The Exchange" and pick "From the desk of..."
