The Truth About The Great COVID-19 Migration
By now, you’ve probably read in the news or heard from friends and colleagues that just about everyone and their mother is moving. Millions of people are pouring out of popular gateway cities like NYC and San Francisco to more affordable living in the South and across the Sun Belt. Texas, Florida, and even Idaho are benefiting from this relocation.
Many of these news stories include anecdotes from city-dwellers who “had enough” of the pandemic shutdowns and decided to move somewhere more appealing. Last year, with home prices and mortgage rates lower than they had been in some time, the impulse to up and leave for greener pastures is easy to understand.
But the problem with this narrative is that it’s really only half the story. While it’s true that there has been a mass migration out of coastal gateway cities and metros, nearly as many new residents have taken their place. Some have even come back home.
What’s really going on here? Let’s take a look at the data to find out.
Does the data really show a “great migration”?
The easiest way to show both sides of this compelling and somewhat confusing story is to look at a single case study: New York City. As the preeminent East Coast gateway city, what happened to the Big Apple in 2020 can give us some clues as to what is happening around the country.
In 2020, 3.57 million people left New York and took $34 billion with them. Taken at face value, that seems like a tremendous loss for any city to suffer—especially given the budget deficit NYC incurred as a result of pandemic spending.
But, at the same time, it’s important to look a little deeper. In 2020, 3.5 million people also moved to New York. Coincidentally, a conspicuously high number of Florida, Georgia, North Carolina, and Maryland license plates started popping up around the five boroughs.
Granted, these incoming migrants make less than the residents who left, and there was still a net loss of 70,000 New Yorkers overall. Yet back in 2019, before the pandemic began, New York City had a net loss of 2,600 residents each week, or 135,200 annually—nearly double the net loss of 2020.
Interesting, right? What does this mean for our cities and our country as a whole?
A less dramatic migration than we thought
Lending Tree recently released a survey that revealed nearly half of Americans were considering moving somewhere new in 2021. In fact, two out of three Americans are looking for features they hadn’t previously considered, like a yard, a bigger kitchen, or an in-home office.
While 2021 is still up in the air, one thing’s for sure: 2020 was, without a doubt, a monumental year for lending. In fact, our proprietary data showed that the number of digital loan applications doubled from 2019 to 2020 (238,447 to 449,226 applications).
The facts check out: Americans are pursuing home ownership in record numbers and some are moving out of state. But while there was a 4.4x increase in loan applications for those opting to relocate to a different state between 2019 and 2020, that figure is still dwarfed by the number of in-state loan applications, which rose nearly 6x:
Although some people are moving to different states, most movers stay within state lines.
Yes, people are moving away from dense metros, especially on the East and West Coast, but migratory patterns are not quite as dramatic as you may have been led to believe.
In fact, most of the migration patterns indicate more movement into cities. To better understand what’s going on here, let’s look at something called the UMI index.
What the UMI Index tells us
The U-Haul Migration Index (UMI) is a ratio of movement into or out of cities, based on the number of U-Haul rentals going in and out of the city in question. In short: the higher the UMI, the more people are migrating out of cities.
Interestingly, the aggregate UMI across American cities has actually decreased since 2018 for the biggest cities in the United States. This could indicate some very important things:
- Fewer people are leaving cities now than there were a couple of years ago.
- There probably isn’t a mass exodus out of U.S. gateway cities right now.
But if that’s the case, why is this the current mass media narrative? In other words—who benefits most from these stories?
More opportunities for the rich
The Guardian posted a scathing article entitled “Wealthy New Yorkers regret leaving the city? What a surprise.” While it is designed to be inflammatory, it brings up a significant point. Earlier, we mentioned how New York not only lost 70,000 people last year, but also $34 billion.
Those two numbers don’t quite seem to add up, do they?
What often goes unsaid is that the Great COVID-19 Migration has been largely driven by people who can actually afford to move. As expected, the vast majority of Americans in the Lending Tree study (over two-thirds) who were “considering” moving had the ability to work from home. That means most migrants are from a specific subset of white collar professions.
Another thing we discovered in our proprietary data was that although the number of digital loan applications nearly doubled, they weren’t from first-time home buyers or people looking for a permanent change of scenery. Many Americans took advantage of rock-bottom interest rates in 2020 to purchase secondary homes, rental properties, or even fix-and-flips.
Consider the graph below, especially during Q3 2020.
Secondary home and investment property loans grew as a percentage of overall loan applications.
Secondary property applications, for example, more than doubled from Q3 2019 to Q3 2020. Consider the implications—is there really a great migration if people are buying more summer homes and flipping houses for profit? CNN did a story on Americans purchasing a second home as an escape from COVID-19—certainly a privilege reserved for the wealthy.
The volume of investment property sales grew 50 percent from Q3 2019 to Q3 2020. Chances are, these loans weren’t paid out to the furloughed, jobless residents of big cities—these are wealthy people seeking and taking advantage of buying opportunities during one of the most difficult times in recent memory for most Americans.
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