With the middle-class squeezed by the rising cost of living, particularly housing costs, many average-earners find it an onerous endeavor to create a decent life for themselves and their families. Living in a big metro like New York or Los Angeles may come with a high income and more opportunities, but the cost of housing in these expensive areas can place a middle-class lifestyle too far out of reach.
The data itself tells the story. The average monthly rent in Manhattan is around $4,100, which represents a crushing 59% of the area’s median household income ($83,500), and the median cost of a home in the borough is $1.1M, 13 times the median income. The price to income ratio is a commonly used indicator of how much house one can afford and the recommended ratio is 2.6. Another example is Los Angeles County, where the rent costs on average $2,100 per month or 38% of income, and the median price of a home is around $630,000, almost 10 times the median yearly income of $66,000 in this area.
One solution to this issue is to move, so we decided to take a look at population movements within the U.S., using the most recent U.S. Census county-level population data. According to the U.S. Census Bureau, around 55% of those who decide to move do so for a housing-related reason, such as to relocate to a new or better home, to find cheaper housing, or to own their home instead of rent:
Affordable migration turns top-tier metros into losers and second-tier metros into winners
To figure out which counties saw the largest net changes in population due to moving in or out of the county, we subtracted the total outbound domestic migration from the total inbound domestic migration over a five-year period between 2012 and 2017. As such, we came up with the list of counties where domestic migration over a 5-year period translated into the highest net gain in population versus the counties where domestic migration brought about the highest net loss of population over the same period of time. This analysis looks strictly at resident population movements (domestic migration) across county lines, and does not include international migration (immigration) or natural population changes due to natality or mortality.
Moving away from an expensive, so-called first-tier metro to a more affordable second-tier metro is a major trend frequently referred to as “affordable migration.” Here’s a side-by-side look at the top 10 counties Americans are leaving and the top 10 counties Americans are moving to:
Maricopa County, AZ (a.k.a. Phoenix metro) tops the list with a 221,000 net population increase via domestic migration between 2012 and 2017. Clark County (Las Vegas metro) saw the second largest influx of population, 127,000, while Denton County, TX (located in the Dallas – Ft. Worth metroplex) gained 96,000 residents, the third largest. Four other Texas counties are in the top 10, as well as Lee County on Florida’s Golf Coast, Riverside County (Inland Empire) and Wake County (Raleigh, NC metro).
The metro areas of Los Angeles, Chicago, New York, Miami, and Washington DC are the top losers in terms of domestic migration over the past five years. Los Angeles County lost a net of 381,000 people in a 5-year interval, and the reasons usually cited by Californians who leave the state are high housing costs and taxes. High taxes are also often blamed for the population decrease in Cook County, IL. The county home of Chicago lost the second largest number of residents in the last 5 years, 290,000.
Four New York counties representing four New York City boroughs are also in the top 10 with the largest outbound domestic migration, with population losses of 192,000 in Brooklyn, 162,000 in Queens, 110,000 in Bronx and 100,000 in Manhattan.
Low incomes and a sharp rise in housing costs are among the top reasons 176,000 residents left Miami-Dade County in five years via domestic migration, also the area is gaining population through international migration. Wayne County, Michigan, home to the City of Detroit, lost 106,000 residents. Fairfax County, VA, and Santa Clara County, CA wrap up the top 10, with net population losses of around 79,000 and 70,000.
Interestingly enough, 8 out of the 10 counties that have the biggest net losses in population due to domestic migration are otherwise growing in overall population thanks to immigration and births. The two exceptions are Cook County, IL and Wayne County, MI, which have shrunk in total population during the time period studied.
Housing is roughly twice as affordable in the top magnet-markets than in the top areas that are losing population
Analyzing rent data from Yardi Matrix and home sale prices from Redfin, a national real estate brokerage, we calculated what it costs a middle-income family to rent or buy in each of these 20 counties. Right off the bat, it is clear that it’s much easier to pay the rent or purchase a home in metros like Phoenix, Dallas, or Raleigh than in New York, San Jose, or L.A.
The rent is anywhere from 14% to 26% of the median income in the top 10 counties where people are moving, while it ranges from 18% to 64% of income in the top 10 counties that people are leaving, combined. The average rent in the top 10 in-migration counties is $1,110, while in the other 10 counties it is $2,207, or double.
In terms of home price affordability, the price of a house in the top 10 counties where people are moving is between 3.3 times to 5.8 times the median income, while in the 10 counties that people are leaving it ranges from 3.0 times to 13.2 times the median income. The median home price is around $295,000 in the top 10 in-migration counties, while in the top 10 out-migration counties it comes to an average of $566,000, almost double.
Incomes, on the other hand, are not necessarily higher in the counties/metros that people are leaving. The median incomes in the Texas counties of Denton, Fort Bend, Collin, and Williamson range from $86,000 to $94,000, all surpassing the median income in Manhattan of $83,500. Maricopa County, AZ presents some great advantages for relocation. The median household income in the Phoenix area is around 63,000, only about $3,000 less than that in Los Angeles metro ($66,000). Meanwhile, the rent is $1,000 per month cheaper in Phoenix (which comes out $12,000 per year cheaper than in L.A. County) and the median price of a home is $350,000 less in Phoenix metro compared to L.A. metro.
To better understand what makes Maricopa County the top destination to move to and what role housing affordability plays, we asked for the opinion of Mark Stapp, Fred E. Taylor Professor of Real Estate, Executive Director of Masters of Real Estate Development, and Director of the Center for Real Estate Theory and Practice at Arizona State University in Tempe, Arizona:
Housing is a critical element in population expansion and economic development in Maricopa County as in all places. There is currently an affordability issue because the cost of housing has increased faster than incomes. But it’s more than just looking at an affordability index to determine the impact of housing on people’s decision to move to Maricopa County. More important is the total housing burden, the desirability of the area (quality of the place) and the type of jobs being created. Key reasons people typically give for moving to Phoenix metro area are: climate (no natural disasters, many days of clear skies and low humidity and ability to live an active outdoor lifestyle); amenities (natural/open space and many activities); cost of living (transportation, heating and cooling, property and income tax, etc) and employment opportunities (type and amount of jobs). […] But Phoenix does have important advantages that in the long run should help resolve, or at least keep in check, affordability issues. These advantages include a regulatory environment that is less onerous than many states making new development faster and less expensive to entitle and build, few constraints to future growth, relatively new transportation infrastructure, sufficient domestic water supply (diverse sources and most advanced water laws have made metro Phoenix much more resilient to shortage than most of its competitive metro areas) and available land that is easy to develop. These facts mean that adding median priced homes is relatively easy and less expensive which will help resolve the affordability issue over time […], according to Professor Stapp.
Most of the counties with the biggest decreases in population exhibit high levels of housing unaffordability
Los Angeles County, CA has lost the most residents of any U.S. County in the last 5 years, 381,000. But first, it’s important to mention that L.A. County is the largest county in the U.S. by population, with over 10 million people. That being said, there’s no denying that the area is dealing with a housing affordability issue, particularly the ability to purchase a home. The L.A. metro median home price of about $630,000 is 9.5 times the annual income of $66,000 in L.A. County, considering that an ideal ratio would be less than 3.
Of the four New York boroughs who have made the list, Brooklyn is arguably the most surprising. Once a popular more affordable alternative to Manhattan, the most populous of New York’s boroughs (2.6 million) may have become too popular for its own good. The median price of a home has reached $687,000, 11.3 times the annual household income in the borough ($60,900), while the rent burden is 55% of income, chasing out low and middle-income residents.
The most unaffordable is Manhattan, where the median price of a home ($1.1 million) is a staggering 13.2 times the median household income (83,500) and the rent burden is 59%. Owning a home in the heart of the Big Apple is virtually unrealizable on an average salary.
Santa Clara County, CA (San Jose metro) in the South Bay Area is one of the least affordable areas in the state, according to the California Association of Realtors. Record home price increases in Silicon Valley have brought the median home price in the county to an eye-popping $1.25 million, 10.2 times the median income for the area, which is $122,500, driving tens of thousands of people out. The latest housing affordability reports show that less than 1 in 5 residents can afford a home in the Bay Area.
While housing costs are clearly a driving factor for relocations, there are three counties on the list that are the exception. Both rents and home prices are moderately affordable in Cook County, Illinois (Chicago metro), yet the county has lost 290,000 residents in five years. In a similar fashion, Wayne County, MI (Detroit metro) has lost 106,000, and Fairfax County, VA (part of Suburban Washington, DC) has lost 79,000.
Although the Chicago metro area has a solid economy and a competitive job market, many are leaving it to escape the high taxes. Chicago area property taxes are higher than 93% of the U.S. Steep county and city sales taxes are adding to the total tax burden. Also important to take into account is that Cook County is the second largest county in the U.S., 5.2 million people.
There are many reasons for the population out-migration in Wayne County, but high housing cost is not one of them. It is, in fact, the opposite, says Lan Deng, Associate Professor of Urban & Regional Planning, Faculty Director, Real Estate Development Certificate, Taubman College of Architecture and Urban Planning at the University of Michigan in Ann Arbor, MI. Wayne County includes the City of Detroit and several nearby inner-ring suburbs. The county suffered from population loss for several decades due to de-industrialization and economic decline that Detroit has experienced. This became worse during the last housing crisis, as the housing market in Detroit nearly collapsed, with prices dropping by 70 to 80%. As the city filed for bankruptcy in 2013, it could not provide even the most basic public services. So it is understandable that residents in Detroit wanted to move out. And they could. Due to the decline in housing price across the board, many of the suburbs in the region that used to be unaffordable to Detroit residents opened up. Massive job loss from the recession was also a big reason for the accelerated population loss in Detroit and Wayne County, adds Professor Deng.
Despite the fact that it boasts one of the highest median incomes in the country, Fairfax County, VA has lost 79,000 residents in the last five years to other parts of the country. Fairfax County is the largest county in the DC metro area, with a total population of 1.1 million. Among the reasons cited for the loss in population are the state’s lagging economy, as well as the county’s sluggish new housing construction in relation to the demand.
The most popular moving destinations show healthy economic growth
It’s no secret that any notable flow of population follows a money path. It’s not enough to have cheaper homes if you won’t have the job and income to support that mortgage or rent payment. The ideal place is one with reasonably-priced homes, good job opportunities, and a good income. A look at the unemployment rates and average job growth in the metro areas of the counties in the top Phoenix, Las Vegas, Dallas-Fort Worth, Houston, Fort Myers, FL, Raleigh, NC, are doing great not only in terms of income but also economically, outpacing larger metros in job growth and posting better unemployment rates, overall.
Here’s a brief economic comparison of the top 10 counties:
- Report prepared by RENTCafe.com, a nationwide apartment search website.
- Population data source: U.S. Census Bureau County Population Totals and Components of Change 2012-2017.
- Domestic migration, also known as internal migration, is defined by the U.S. Census Bureau as the movement of people within national boundaries. It does not include changes in population caused by international immigration or by natality.
- In this report, we analyzed the net domestic migration changes (inbound migration minus outbound migration) in the U.S. across county lines from 2012 to 2017 (a 5-year period).
- Income data source: 2018 median household income estimations by RENTCafe based on historical data from the U.S. Census Bureau.
- Home sale price data source: 2018 median home sale price for all residential sales provided by Redfin, a national real estate brokerage.
- Rent price data source: 2018 average rent provided by Yardi Matrix, a RENTCafe sister company that offers comprehensive apartment market data for properties of 50 units or larger.
- Economic data source: 2018 unemployment rates and jobs statistics provided by the Bureau of Labor Statistics.
- Data may be rounded and/or approximated for the purpose of better illustration.
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