Americans are on the move. With the pandemic still very much a part of our daily lives and inflation raging on, many families are deciding that it’s best to uproot their lives and start anew. With more and more people leaving some of the most populous states in the country, it’s more important than ever to consider how this will affect investments in these particular areas.
In early 2022, United Van Lines released their annual study, which uses their data to track their customers’ migration patterns and why they were moving – including retirement, health, family, lifestyle, cost, and job-related reasons.
The report concluded that “Americans were on the move to lower-density areas and to be closer to their families throughout last year” before revealing which states had the most inbound and outbound migration.
High-density population centers topped the list, as New Jersey was found to have the highest ratio of inbound migration, with about seven people moving out of the state for approximately every three people moving in. Here is every state that made the top ten:
States That Had the Highest Outbound Moving Percentages
- New Jersey – 70.5%
- Illinois – 67.2%
- New York – 63.1%
- Connecticut – 60.1%
- California – 59.3%
- Michigan – 57.7%
- Massachusetts – 57.6%
- Louisiana – 56.5%
- Ohio – 56.3%
- Nebraska – 55.7%
Diving further into the report unveiled the reasoning behind so many people leaving these states: 31.8% of Americans who moved cited “being closer to family” as their main reason.
In addition, while 32.5% reported that they moved due to job-related reasons, this figure pales in comparison to 2015 numbers, when over 60% of Americans moved for reasons related to their employment.
States That Had the Highest Inbound Moving Percentages
- Vermont – 74.3%
- South Dakota – 68.8%
- South Carolina – 63.3%
- West Virginia – 63%
- Florida – 62.3%
- Alabama – 62.1%
- Tennessee – 62%
- Oregon – 60.5%
- Idaho – 60.4%
- Rhode Island – 59.1%
Upon closer inspection, smaller, more rural states made up the majority of this list, showing that Americans desired to leave larger states focused on large urban city centers over the past year.
What It All Means For Potential Investment
While these statistics show that there may be potential investment opportunities in the states that have recently had an influx of people moving to them, Blaine Thiederman, founder and principal advisor of Progress Wealth Management, warns that it’s rarely that simple. In fact, population growth or decline often does not predict future property investment trends.
“While most people make the assumption that more people moving out of an area should lead to lower home prices, it’s rarely that simple. California, for example, lost 117,552 people in 2021, and its real estate values still grew by 43%.”
So what does this mean for property investment?
As it turns out, as Blaine explains, a savvy investment should reflect on your answers to a variety of questions, not just the latest population migration data.
“The key to success is to understand the motivation of your target market; the same goes for real estate. When you’re analyzing where to invest in real estate, the first step is to pick out the state you’d like to invest in and figure out who’s most likely to move there.”
Blaine recommends asking yourself what the potential buyer plans to do in the home.
First and foremost, identifying your target market moving to the area is crucial. Is it a family looking to settle down with a modest house and a big backyard? Is it a retiree looking for comfort and a location within walking distance to everything in town?
These are the questions you should be asking yourself.
“If you can figure out who your target market is that’s moving to the area that you’re investing in, you’ll be able to find the homes that are more likely to appreciate faster than what’s average in your area,” Blaine advises.
“The next step is to find a home like the one you think you should purchase and buy it for less than it’s actually worth. This is the hard part and will require more analysis and art to your decision than the former.”
With any investment, due diligence and proper research are top priorities.
As 2023 approaches, investors should keep an eye on these ever-shifting population migration patterns and real estate market trends. But, above all else, keep it simple with this advice in mind:
“As with any business, start with ‘why’ someone would be interested in living in the home that you’re buying as an investment,” Blaine suggests.
“And then buy it at a price that’s less than what it’s actually worth.”
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This post was produced and syndicated by Wealth of Geeks.
Image Credit: Unsplash.