What Decreasing Internal Migration Means For Home Builders
The Reduction in Internal Migration Impacts Home Builders
Studies have shown that internal migration (the rate at which people relocate within the U.S.) has been declining steeply in recent years. The National Association of Home Builders is aware of this shift and reports that short-distance migrations from within the same county fell to 7.6% of the total population in 2014-2015, which is the lowest level since 1984. The reduction of long-distance migrations between different counties and states is even more dramatic. In regard to relocation from one county to another within the same state, that figure plummeted to 2.1% during 2014-2015, compared to 3.5% in 1984-1985. Interstate migration is even lower: 1.6% in 2014-2015, compared to 4% in the 1980s.
This reduction is most widely seen in younger generations, but what impact could this trend have on home builders? Keep reading to learn more about what this reduction means, why it’s happening and how it might affect your business.
Why did Internal Migration Slow throughout the U.S.?
The jury is still out on the exact reasons behind the decline in internal migration, but experts have offered several theories:
- Internal migration has slowed because Americans have been “frozen in place” due to the Great Recession.
- The population is aging and these homeowners are less likely to move later in life.
- Rising homeownership rates may have also played a role in the internal migration reduction, since homeownership typically tethers people to a specific location.
Young adults in the 20-34 age bracket have been impacted the most. In fact, since 2000 this demographic has experienced the most extreme declines in mobility. The reasons are likely due to effects of the Great Recession, like a sluggish job market and the associated delay in creating their own households.
Since older, established buyers aren’t moving around as much, and younger buyers aren’t moving either, are builders impacted? The answer isn’t quite so straightforward and could be determined by where you’re building.
What Areas of the Country have been Impacted by the Decrease in Migration?
Builders in Sun Belt states experienced a business boom in earlier years, but younger Americans aged 25 to 34 are now less likely to consider communities like Atlanta, Phoenix, and Riverside, California, according to William Frey. Frey is a senior demographist at the Brookings Institution and he explains, “These places that were getting real new interest amid the bubble are not seeing that anymore, and in a way it is making people give another place a second look.”
For home builders in these areas the decreased migration might mean that they won’t be able to sell as many homes in those once-flourishing communities. Younger buyers are more likely to stick with a “hip place they know,” according to Frey. However, he also thinks that there will eventually be a “pent-up demand” when these buyers begin to relocate again, and that could be great news for builders in these regions.
Has decreased internal migration affected demand for new homes in your local area? Let us know in the comment section.
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