Affordable Migration: Goodbye Chicago, New York, LA - Hello 5 Cities in Texas

People are leaving LA, Chicago, New York, Miami, D.C. and San Jose, in droves, for places with cheaper housing.

A Rent Cafe study on Affordable Migration in the US shows people are leaving LA, Chicago, New York, Miami, Washington D.C. and San Jose, in droves, for places with cheaper housing. Texas has five of the top 10 inbound cities.

  • Metro Phoenix, Las Vegas, and Dallas-Fort Worth top the list of areas with the largest net population increases between 2012 and 2017.
  • With a median income just $3,000 less than that in Los Angeles and a rent $1,000 cheaper, Maricopa County has become increasingly popular among those fleeing hot markets like the ones in California. Same goes for the top Texas counties in our list where the median income is above that in Manhattan ($83,500).
  • The top counties for in-migration present great advantages in terms of housing affordability. In this category, the rent is anywhere from 14% to 26% of the median income, while in the top 10 out-migration counties it can reach a whopping 64%.
  • What do Los Angeles, Chicago, New York, Miami, Washington, D.C. and San Jose metro areas all have in common? Besides high levels of housing unaffordability, these are all places where US residents are leaving in droves. The home price to income ratio ranges here from 6.3 times to 13.2 times the median income, while a renter household earning the median income is considered rent-burdened.

Reasons for Moving

According to the U.S. Census Bureau, around 55% of those who decide to move do so for a housing-related reason, such as to relocate to a new or better home, to find cheaper housing, or to own their home instead of rent.

Although the Chicago metro area has a solid economy and a competitive job market, many are leaving it to escape the high taxes.

Chicago area property taxes are higher than 93% of the U.S. Steep county and city sales taxes are adding to the total tax burden.

Also important to take into account is that Cook County is the second largest county in the U.S., 5.2 million people.

Mike "Mish" Shedlock

Comments
No. 1-12
Refuztosay
Refuztosay

God - I hope those liberals stay up north and out west. Everywhere they go they ruin it. Just ask any of the neighboring states to California - they all complain about Cali but then vote in Leftist as soon as they arrive in their new location - thereby dismantling the policies that made their new location attractive. Austin Texas is already overrun with Leftist / Socialism it sickens and saddens me to see Texas infected by these people. Question is - where the hell will they move once every state is bankrupt like California?

Casual_Observer
Casual_Observer

There have to be buyers in high cost areas to drive the movement. They are coming from China and elsewhere. If foreign money into the US slows down there will be a domino effect on the overall movement in reverse. Once demand dries up so does everything else including the economy. Housing, health care and finance cannot sustain this boom just like the last time. 1 dollar of debt now only produces 10 cents of GDP. That is big trouble for the developed world.

mbass100
mbass100

maybe people are moving from LA to Riverside, not Texas? If you are right, that's great news for our democracy.

DFWRealEstate
DFWRealEstate

Just don't confuse Denton County with with Denton Texas. Denton TX has lower median incomes and home prices than Denton County. Denton County includes some nicer suburban areas, master-planned communities and other cities. I should know, I live here. If you are moving to the DFW area, give me a call. :)

themonosynaptic
themonosynaptic

This should be of little surprise. Houses have been growing at about 10%/year in the SF Bay Area, and at the same time, many people are now fully recovered from the GFC. This makes retirement an option, especially with Obamacare in place. Downsizing from a 2,500 sq. ft. home in the Bay Area to Nowhere, TX is even more appealing. If your house in Santa Clara doubled from $1,000,000 to $2,000,000 since 2009 and you decide to move to TX where the houses have increased 50% from $200,000 to $300,000 in the same time, you are $900,000 ahead.

Beyond retirement (many of my friends look at their Bay Area houses as their additional 401(k)), there are also people who are looking for a place to bring up a family. Where I live we see SF couples move in with small kids who have sold their 1,000 sq ft apartment in SF (or stopped renting) for a house with a yard in the 'burbs. Moving further is just putting more miles on the U-Haul, and the further you go the cheaper it gets.

I think what we might be seeing here is good old supply and demand in a market with an increasingly steep gradient in house prices.

The real question is "why is the house price gradient in nominal terms increasing between CA and TX?".

I found a well researched answer in "The New Geography of Jobs", by Enrico Moretti.

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