United States | Movers and shakers

Why Americans are rethinking where they want to live

And what the social and political consequences could be

|DALLAS, TEXAS
Listen to this story.
Enjoy more audio and podcasts on iOS or Android.

AFTER THE second world war, Americans took their new cars on their new highways and decamped for the suburbs, changing American life forever. Today, the internet and remote work presage a similar transformation, removing the need for people to live near their offices. A two-hour commute a couple of days a week may be worthwhile, if it allows a bigger house and smaller mortgage payment. So might a move across the country, if one rarely has to travel to company headquarters. Adam Ozimek of UpWork, a freelancing platform, has estimated that some 14m to 23m Americans may relocate due to the rise of remote work, which amounts to between 9% and 13% of today’s workforce.

“People are asking deep questions about how and where they want to live,” says Richard Florida of the University of Toronto, who observes a “great unmooring” in Americans’ thinking about their location. Chris Porter, who works for John Burns Real Estate Consulting, which advises homebuilders, says this is “unlike anything we’ve seen in decades. The closest comparison is the suburbanisation we saw in the 1950s”. How might American mobility affect the country?

Migration is following two trends, both of which existed before the pandemic. First, people have been leaving large, dense, expensive urban cores for smaller, less-dense cities and suburbs. Second, people and companies have been moving to warm, low-tax states in the South and Southwest (see chart 1).

Take the urban out-migration first. Stephan Whitaker at the Federal Reserve Bank of Cleveland uses credit data to show how hard urban neighbourhoods were hit during the pandemic. More people left and fewer people than usual chose to move into large cities, such as New York, Los Angeles and Chicago. Late 2020 saw a peak of net out-migration from urban neighborhoods of around 75,000; in the second quarter of 2021 it averaged more than 54,000 per month, more than double pre-pandemic figures.

Mr Whitaker estimates that from March 2020 to March 2021, around 600,000 people moved from large, high-cost metro areas to mid-sized cities (meaning those with between 500,000 and 2m people), and more than 740,000 moved to rural areas, small towns and cities with populations below 500,000—an increase in both instances of 13.5% from pre-pandemic levels. New York and San Francisco saw the largest increases in the share of people leaving. In recent months, young renters have started returning to some cities while middle-aged people are continuing to flock to the suburbs to purchase homes.

Cost and covid-19 are not the only considerations. Many cities have seen an uptick in crime, homelessness and business closures at the same time that they are experimenting with criminal-justice reform policies and proposing tax increases. Edward Glaeser, a professor at Harvard and co-author of the book “Survival of the City”, says he worries about “the completely understandable urge for progressive action in cities running into the buzzsaw of heightened geographic mobility”. But he warns that if cities target the rich and businesses “with taxes and fail to offer basic services like public safety, then something that was a modest economic disruption could turn into something much more severe”.

Towns and suburbs near large cities have been the biggest magnets for migrants. According to The Economist’s analysis of data from the United States Postal Service, the three zip codes with the most changes of addresses for new arrivals were in suburbs and exurbs outside of Houston and Austin in Texas and Jacksonville, Florida. Property is cheaper, but people are still within driving distance of a city.

More locations have a shot at attracting people than ever. Data from Zillow, a real-estate firm, which announced in July 2020 that most of its 5,400 employees could work from home indefinitely, show the new shape of migration patterns. From March 2020 until February 2021, 35% of Zillow’s employees moved house—with around three-quarters of them staying in the same metro area. Around 21% of movers went at least 50 miles from their previous home, triple the share who did so in 2018. Their destinations were zip codes with home values around 9% less expensive on average, compared with 0.5% less in 2018.

The places attracting people share common features: relative affordability, a strong sense of community, amenities (natural or constructed) and friendliness toward business, says Cullum Clark, director of the Bush Institute-Southern Methodist University Economic Growth Initiative. Proximity to nature is attractive, but so is the ability to raise a family and nurture a nest egg. According to Joel Kotkin of Chapman University, “People go to places where they can achieve the American dream. It’s increasingly difficult to do that in cities that created the American dream, like New York,” because of their expense.

Housing costs are one indicator of where people are going. Kalispell, Montana, has seen the largest increase in property values in the country—with the average home up nearly 50% year-over-year. Second is Austin, Texas, followed by Boise, Idaho. Towns that people might never have considered living in full-time have become contenders. Traditional vacation destinations—including Bend, Oregon and California’s Lake Tahoe—have seen a surge of interest.

But not every under-the-radar town has prospered. “It’s very hard to find examples of places that were losing people or jobs but have drawn them in during the pandemic,” says Jed Kolko, chief economist at Indeed, a job-listings firm. Some had expected left-behind cities and rural areas to benefit from remote work and migration. “But the migration data so far suggests that the relatively affordable places people move to are the affordable places they were already going,” says Mr Kolko.

The allure of suburbs has been a trend more than a half-century in the making, but covid-19 offered an additional boost. “Urbanising suburbs”, as Mr Clark called them, are gaining amenities but keeping their characteristic sprawl. Contrary to the stereotype of identical white homes with white occupants, today’s suburbs are ethnically diverse. Wendell Cox of Demographia, a consultancy, estimates that 86% of the population of major metro areas live in the suburbs or exurbs. That includes 90% of whites, 83% of Latinos, 81% of Asians and 76% of African-Americans. Latinos, in particular, have been relocating to suburbs at greater rates in the past two decades: since 2000 their number has risen more than 50%, compared with a 20% rise for African-Americans and Asians and just 1.3% for whites. Ross Perot, Jr., a real-estate developer, says he’s “never seen as many people moving into Dallas. It’s shocking.” But far more people are going to the suburbs surrounding the city.

To all the states I’ve loved before
The growth of the Dallas-Fort Worth area underscores the second trend, which is a shift of people to low-tax states in the South and West. Tennessee, North Carolina and Utah have all attracted companies and new migrants. But of the top 50 zip codes that saw the largest percentage change in in-migration since the start of covid-19, 86% of them were in just three states: Texas (46%), Florida (24%), and Arizona (16%).

Warm climates matter, but so do affordability and taxes. Both Florida and Texas levy no state income tax, while California’s top rate is 13.3% and New Jersey’s is 10.75%. Two owners of buildings and housing developments in the Dallas area estimate that 20% of occupants are recent Californian transplants.

Economics may not be the whole picture. Before the arrival of covid-19, “a lot of government policy was opaque”, says Mr Perot. But “with covid, the leadership and cultural differences of Republican versus Democratic states became black and white.” Unlike Texas and Florida, which reopened quickly, California insisted on factories and businesses staying shut, to the mounting frustration of bosses. According to Mr Florida of the University of Toronto, “the reason people have left cities and moved to rural hinterlands or cities in the South is not just taxes. It’s the fact that they can live their daily life and send kids to school with minimal restrictions.”

But affordability is in the eye of the beholder. Out-of-state buyers, flush with cash from selling their expensive homes, have pushed up home values in once affordable markets. Prices rose so much in Frisco, Texas that Scott Warstler, executive director of operations for Frisco Independent School District, decided to put his house up for sale. He sold it within three days, above asking price, to a Californian buyer. He put in offers on four rentals—all above asking price, with six months of rent up-front—but was gazumped by people willing to pay a full year of rent in advance. Finally, he found somewhere in Prosper, the next town over. This outward shift is also under way in Denver, which was popular before the pandemic and experienced a rapid rise in home prices: now people are moving 60 miles south, to Colorado Springs, which is cheaper and less congested.

As with everything else, the rich have more choices. The 70-odd mile stretch running from Miami to Palm Beach has become a popular destination for people fleeing Wall Street and Silicon Valley. In Palm Beach, at least ten homes have sold for $85m or more this year. One financier who moved from Connecticut to Florida reckons that home prices on Palm Beach Island have tripled since the start of covid-19. He predicts that the next wave of millionaire migration will not be from the Northeast and West coast to the South but from all 50 states to Puerto Rico, which is the only place one can live in America and pay no tax on capital gains.

Even if not to Puerto Rico, though, the flow of people and firms out of California will probably continue, as state politicians consider ratcheting up taxes on high-earners and imposing new regulations. Since January, 114 companies have moved their headquarters from California, double the number in 2018, according to Joseph Vranich of Spectrum Location Solutions, a relocation consultant. Businesses of all shapes and sizes are assessing their options. The poster-child for Silicon Valley disruption, Tesla, recently relocated from California to Texas. Mr Vranich says he was even contacted by a winery in northern California that wants to shift its headquarters: it will leave the vines there but take its rootless departments, such as distribution and finance, elsewhere.

Offering incentives to lure companies to new places is less important than it used to be, says Chris Steinocher of the St Petersburg Area Chamber of Commerce in Florida. He reckons that conversations about incentives have halved, even as interest from companies that want to move to his part of Florida is up 20-30%. They will go where talent wants to live. Conventional wisdom is that people move for jobs, but the opposite may increasingly be true. “There’s been a long-term shift toward people making the decisions about where they want to be and businesses following,” says Mr Clark of the Bush Institute.

If the dispersion of Americans means more places will thrive, that is a good thing. “If I had to choose between an America where there were two or three wealthy cities or two or three hundred, I’d choose two or three hundred,” says Glenn Kelman, the boss of Redfin, a property brokerage. In 2005-17 a whopping 90% of employment growth in the “innovation” sector was concentrated in just five coastal metro areas: Boston, San Diego, San Francisco, San Jose and Seattle. Innovation in the coming decades will probably be more widely distributed.

But the trends also point to some potentially troubling consequences. The long-term prospects of America’s biggest cities depend on how well they are managed; crime and homelessness will dampen their recoveries. With fewer people commuting into downtowns because of remote work, shops may not return, putting a greater burden on remaining city-dwellers to fund costly services such as public transportation.

Meanwhile, people in suburbs and small towns may find themselves priced out. Mr Kelman of Redfin worries about the consequences of rocketing home prices and rents in places that used to be inexpensive. “As housing becomes less accessible to people, it could radicalise America,” he predicts. “If you live in a place that used to be affordable and now it’s not, what stake do you have in the system?”

Georgia on my mind
If the country’s population were expanding, where Americans choose to live might matter less. But in the past decade, its population grew at the second slowest rate since 1790, just slightly faster than during the Great Depression, according to Bill Frey of the Brookings Institution (see chart 2). Immigration has slowed markedly, due to the pandemic and tighter border controls.

This means that states are competing for a limited resource: the people that comprise their tax base. And many states are losing the fight. Between 2019 and 2020, 24 lost more Americans than they gained. Over the past decade, Illinois, Mississippi and West Virginia saw their populations decline. The implications for funding pensions and public education could become dire, and make living in shrinking states even less attractive for younger people, who will finance those debts. Growing states such as Texas and Florida will have an economic advantage.

They will also influence the country’s politics. Texas, Florida, Colorado, Montana, Oregon and North Carolina all gained population, and therefore congressional seats, while seven states, including New York and California, lost seats. According to the 2020 Census, the South now has ten of the country’s 15 fastest-growing cities with a population of 50,000 or more. Some 62% of Americans now live in the West and the South, compared with 48% in 1970. The share residing in the Midwest and Northeast has fallen from 52% to 38% over the past 50 years. The impact of these shifts will cascade: congressional seats, federal funding and electoral-college votes are all apportioned to states based on population size.

The movement of people will not only give certain places more national political clout: it will also reconfigure local politics. In the 2020 election, Democrats gained ground in Arizona and Georgia in large part due to the young, college-educated, non-white people moving there. The shifting politics of Arizona and Georgia received attention, but less noted is that “growing suburban places moved quite dramatically toward the Democratic party”, says Jonathan Rodden, a political-science professor at Stanford. Traditionally Democrats have been at a disadvantage because so many of their voters are clustered in cities. Their spread outward into suburbs could determine the course of more races.

But it is unclear how long that advantage might last. “The big question that everyone would like to answer is whether this is a short-term reaction to some of the excesses of the Republican party by relatively young, educated voters, or if it is a longer-term realignment of the suburbs,” Mr Rodden says. No one can be sure. A countervailing political force is that some of the people who are moving into Texan, Floridian and Arizonan suburbs from California and the Northeast consider themselves political refugees, fleeing badly-run state and local governments. They may cast votes against Democratic candidates in an attempt to ensure their new locations will not resemble the places they left.

Whatever happens, America as a whole is never stagnant. Towns, cities and suburbs will be transformed by their new inhabitants. The richness, eclectic diversity and creativity of cities will come to smaller places. Nativist attitudes and stereotyping are harder to maintain about your neighbours. “The dispersing of millennials, minorities and immigrants means the country will have more in common than it did before,” predicts Mr Kotkin of Chapman University. That would be something to celebrate.

An early version of this article was published online on December 12th 2021

This article appeared in the United States section of the print edition under the headline "Movers and shakers"

Holiday double issue

From the December 16th 2021 edition

Discover stories from this section and more in the list of contents

Explore the edition

Discover more

Do undocumented immigrants have the right to own guns?

A federal court in Chicago decides that some do. Republicans are outraged

Chicago wants to stop Glock pistols being turned into machineguns

The city is suing the manufacturer


Georgia’s black Republicans have a battle plan for 2024

Joe Biden will have to work harder to win the state’s black voters this year