In 2022, hopes for a resurgence in major cities like Manhattan and Atlanta were briefly sparked as they witnessed a return of residents after being perceived as ghost towns during the pandemic. However, recent data from the U.S. Census Bureau reveals a short-lived revival as Americans continue to migrate away from large metro areas in substantial numbers, driven by the entrenched shift to remote work and the growing allure of more affordable midsize cities and smaller towns. While big cities still experience modest population gains due to an increase in international immigrants, the rate is slower than before the health crisis, according to Goldman Sachs. The struggle to retain and attract U.S. residents, a trend that predates the pandemic but was intensified by it, has led some experts like Hamilton Lombard, a demographer at the University of Virginia, to question the possibility of a rebound.
What are the areas experiencing the most rapid increases in home prices?
According to the Goldman analysis, stronger population growth in smaller towns has resulted in a swifter surge in home prices compared to the pre-pandemic pattern, while large cities have seen a slower acceleration in housing prices. This phenomenon has slightly lessened the substantial disparity in home values between large and small cities, particularly in certain regions. It may potentially attract residents to densely populated metropolitan areas or encourage some renters in urban centers to transition to homeownership rather than relocating to smaller communities.
Is there a trend of people leaving large cities?
Following a decline that extended through the 1960s and 1970s, large cities experienced a revitalization in the 1990s as young professionals were attracted to their cultural and social offerings. However, beginning in the mid-2010s, cities once again began losing residents to suburbs and smaller metropolitan areas. This shift can be attributed to soaring living expenses and a preference among some Millennials in their thirties to establish families and purchase larger homes, as noted by Lombard and Adam Kamins, a regional economist at Moody’s Analytics.
Before the pandemic, counties within metropolitan areas with a population of at least 1 million experienced an annual loss of approximately 200,000 residents to other regions, accounting for both inbound and outbound migration, as indicated in the Goldman report. However, following the pandemic, these losses surged, reaching 750,000 in 2021, 650,000 in 2022, and 550,000 in 2023, based on data from both Goldman and the Census Bureau. These figures represent annual changes up to July of each year. Additionally, Lombard’s separate study reveals that the largest metro areas with over 4 million residents experienced significant domestic migration losses. Prior to the pandemic, these cities collectively lost 400,000 residents annually, but over the past three years, they have seen declines of 820,000, 707,000, and 591,000 residents, respectively.
Where are people relocating to in 2024?
Last year, approximately 266,000 individuals from major cities migrated to metropolitan areas with populations ranging from 250,000 to 1 million, while about 291,000 moved to areas with populations under 250,000, marking small towns as the primary destination for domestic migrants for the first time in decades, according to Lombard. In 2023, the New York City metro area lost 204,000 residents; Los Angeles, 119,000; and Chicago, 64,000, as reported by Census and Moody’s. Meanwhile, the Greenville, South Carolina area (population 975,000) gained 17,000 residents; Lakeland, Florida area (population 818,000) added 30,000; and Yuma, Arizona (population 209,000) picked up 4,000 residents. While Kamins finds hope in the moderation of big-city migration losses over the past three years, with more young adults relocating to many large cities and departing other cities at a slower pace, Lombard highlights that the exodus from large cities remains considerably higher than pre-pandemic levels, likely plateauing at current rates in the future.
Is remote work declining?
Remote work’s decline is evident despite stabilizing rates of employees working from home part-time (20-25%). While companies’ office returns slow urban exodus, a longing for smaller towns persists, driven by lower living costs and quality of life. Towns like Martinsville, Virginia, previously impoverished, now thrive. In 2021, it attracted the second-highest domestic migrants in Virginia, with robust wage growth. Starbucks reflects this trend, shuttering urban stores since 2020 while expanding in small towns nationwide. The shift redefines urban-rural dynamics, highlighting the appeal of smaller communities for post-pandemic living and economic vitality.
Will 2024 be a better time to buy a house?
In contrast to small towns, large cities are experiencing slower growth in home prices post-pandemic, Goldman reveals. While urban areas saw annual price increases rise from 5.3% (2015-2019) to 8% (2020-March 2024), towns with 5,000 to 20,000 residents witnessed a sharper acceleration from 3.5% to 8.6%. Although home prices remain higher in cities, the gap is narrowing. Notably, Boston’s prices rose by 15.3% to $750,000, while Myrtle Beach surged by 54% to $308,000 since early 2019. This trend suggests a potential closure of the affordability gap between urban and rural areas, according to Lombard.
