People are moving all the time. But, for rental property investors, it pays to know which states have the hottest rental markets.
Why Are People Moving?
People move for many reasons. And while people move for job-related or family-related purposes, housing remains a primary contributor. It can stem from a desire for more space or a better neighborhood. Often, people move in search of more affordable prices.
According to Census data, migration has been at record-low rates for more than 7 years. And although the pandemic saw a slight uptick, it did not cause significant or upward swings in domestic migration. However, it did change the way people moved.
Historically, major cities and economic hubs welcomed thousands of new residents yearly. But now, more people are moving to the Southern and Western areas of the country. This is likely due to housing costs and a change in workplace setups.
The COVID-19 pandemic saw a huge shift in how people worked. Because the often-lethal virus could easily be transmitted from person to person, many companies ordered employees to start working from home. Two years and a few vaccines later, offices are returning to work. Yet, a good number of companies continue to allow employees to work from home or, at the very least, use a hybrid format.
The rise in remote work had a direct impact on housing and relocation. Working from home meant people could move to farther places for a quieter lifestyle and a cheaper cost of living. Mortgage rates also fell to record lows at the pandemic’s peak, pushing people to buy homes. After securing low-interest rates, those same people have no incentive to move.
Where Are Americans Moving to?
When you look at the data, it is clear that people prefer to move to certain states more than others. This gives property investors a hint of the following booming rental markets. Some cities are also evidently more attractive. An analysis shows that these cities saw more population growth because jobs recovered faster here after the pandemic.
So, what states are people moving to?
Florida is topping the list, which experienced a 1.9% population change between 2021 and 2022. Domestic net migration gains were at 318,855. Ocala, Tallahassee, Deltona, and Miami, in particular, are very hot right now.
Texas is also a popular choice among movers. The population changed by 1.6% between 2021 and 2022, with domestic net migration gains at 230,961. Houston and McAllen are two cities that experienced the most growth.
3. North Carolina
In North Carolina, Charlotte remains the hottest place to move to. The population grew by 1.3% between 2021 and 2022. Finally, net domestic migration gains were at 99,796.
4. South Carolina
Another Carolina made the list as well. South Carolina experienced a population growth of 1.7% between 2021 and 2022. Domestic net migration rose by 84,030, with Myrtle Beach welcoming the most movers.
Tennessee is not far off from the list. Here, net domestic migration for 2022 was 81,646, equating to a population growth of 1.2%.
Next on the list is Georgia, which experienced a 1.2% population change between 2021 and 2022. Domestic net migration gains were at 81,406. Savannah, in particular, is very hot right now.
Arizona is another popular choice among movers. The population changed by 1.3% between 2021 and 2022, with domestic net migration gains at 70,984, though no particular city experienced higher population growth.
Idaho also made a list. Here, net domestic migration for the year 2022 was 28,639. While net domestic migration is not as high as its immediate predecessor on the list, this still equates to a population growth of 1.8%.
In Alabama, Hunstville remains the most attractive place to relocate to. The population grew by 0.5% between 2021 and 2022. And domestic net migration gains were at 28,609.
Oklahoma takes the tenth spot, experiencing a population growth of 0.7% between 2021 and 2022. Domestic net migration rose by 26,791.
Where Are People Moving From?
The Southern and Western parts of the United States are experiencing a growth in new residents. But those residents have to come from somewhere. According to the same data, certain states have seen a decrease in population. The decline is likely due to expensive housing, high taxes, slow job recovery, or a combination. Interestingly, some of the states that experienced a drop in population are the very states that are typically considered attractive.
California, for instance, lost around 343,230 residents. This equates to -0.3% in population change between 2021 and 2022. New York also experienced a -0.9% population change, losing roughly 299,557 residents. Other states that also lost residents include Illinois (-0.8%), New Jersey (-0.1%), Massachusetts (-0.1%), Louisiana (-0.8%), and Maryland (-0.2%).
Advice for Rental Property Investors
Unsurprisingly, California and New York are two states that have some of the highest rents in the country. As of October 2022, estimates place the average rent in New York at $1,678, and California is not much better, with an average rent of $1,658. And while some investors might find high rent desirable, the drop in the renter population should turn them off to potential investments.
Instead of targeting states like California and New York, rental property investors should consider conditions that experienced the most population growth. Of course, performing a cost-benefit analysis and thorough market research is still important. While a particular state may have a large renter population, that does not necessarily mean that investors can expect gains, especially if housing costs remain high.
Where Are People Moving? The Bottom Line
The housing and rental market in the United States will likely continue to shift with time. Apart from understanding where people are moving to and from, investors must analyze the situation from every angle. And the best way for investors to adapt is to hire a property management company. A property manager is more well-versed in local market trends and can provide better advice.
Rental Choice offers a comprehensive online directory of property management companies. Start your search for the best one in your area today!
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