I said goodbye to some family members this past weekend. Like many Californians they’re leaving the state. It’s probably not surprising to hear, but California lately has been having more residents leave than come. Of course other states are feeling this too because they’re now welcoming (or not) West Coast refugees. Let’s talk about this. Here are a few things on my mind.
Why are people moving? People move for lots of reasons, but affordability is a huge one. We see lots of Baby Boomers wanting to take their California cash elsewhere to retire and live the good life. We also see young families move to lower-priced areas in hopes of putting down roots and even buying a home. But it’s not just about finances. Some residents are looking for a different lifestyle, less traffic, a better job market, more space, more land, and a different business and political climate.
Cashing out at the top: In coming time I expect we’ll see more migration if sellers think the top of the price market is near. I suspect we’ll see this dynamic in the Bay Area too, though they may eye a lower-priced Sacramento instead of out-of-state.
Changing markets: Migration can change a local real estate market in the obvious way of increasing prices and tightening supply, but it can also spur new construction and commercial development. We have to remember builders sometimes even cater their product to buyers coming from out-of-town. This is why locals sometimes look at a project and say, “Who can afford this?” Well, the answer might be wealthy out-of-towners.
DATA SOURCES I’M WATCHING:
1) Local publications: I’m digesting what the Sacramento Bee, Sacramento Business Journal, and Comstock’s Magazine have to say about trends. Here’s a 2018 piece from SacBee that states locals moved most often to Reno, Las Vegas, Phoenix, Seattle, & Austin. I don’t have updated stats yet, but I’m guessing Boise might make this list at some point. Here’s a piece from SacBiz talking about general migration issues. Additionally, the Greater Sacramento Economic Council is essential since they focus heavily on Bay Area migration.
2) Word on the street: What is the real estate community saying? Where are people coming from? And where are they leaving to? These are often clues what is happening in the trenches of escrows. I saw a Realtor recently provide a workshop on how to move to Idaho too, and that’s certainly a reflection of the times (and forward thinking).
3) National publications & data: I’m paying attention to studies from Redfin, Zillow, and other organizations. I’m also keen on articles discussing US residents migrating to the middle of the country. Lots of these studies and articles of course pull data from the U.S. Census Bureau. Here is some research from the Legislative Anaylist’s Office (this is a couple years old but some of the best stuff I’ve seen).
4) Moving companies: One way to get a sense of migration patterns is to listen to moving companies. For instance, SF Gate published a piece a few months back stating more people took a one-way U-Haul trip to Sacramento and Roseville from the Bay Area than any other location last year. Newspapers tend to publish stats like this, so it’s not like you have to go read studies. Here’s a sampling of migration reports though from Atlas Van Lines, United Van Lines, and North American Moving Services.
WIN A SIGN FOR MOVING DAY
When my family moved out of town I made an “Idaho or Bust” sign so we could take pictures on moving day. It was pretty cool for photos, so I made some more signs for locals and real estate agents to give away. In the next few days or so I’ll roll out a simple contest to win a sign on my Facebook page, so be sure to check it out. I’ll keep the contest open for a week or so most likely.
APPLICATION STEP: Last but not least, it doesn’t mean much if we acknowledge a trend without doing something about it. So here are some questions. I shared these a few months back, and they are definitely relevant in this conversation.
QUESTIONS FOR REAL ESTATE PROFESSIONALS
Who are my clients going to be over the next few years?
What are my clients going to need from me?
What skills do I need to add to be ready for the future?
Who is coming to the market?
Who is leaving the market?
Who is going to be participating in the future market?
What steps do I need to take to position myself for the future?
Where can I meet future clients?
VIDEO MARKET UPDATE: Here’s a video market update including lots of cool stats on the million dollar market. Enjoy if you wish.
I hope this was helpful.
Questions: How have you seen migration patterns affect the real estate market? What are the pluses and minuses? What are you seeing happen in your area? I’d love to hear your take.