• Zero Flux
  • Posts
  • Top States for Inbound and Outbound Migration in 2023

Top States for Inbound and Outbound Migration in 2023

Plus, Top 10 Most In-Demand Cities for Renters in the Northeast and 6 more Real Estate Insights

Macro Trends

Another Analyst Drops US Recession Forecast link

  • Fitch Ratings Chief Economist Brian Coulton has revised the 2024 economic outlook, joining others in dismissing the likelihood of a recession. This change is attributed to emerging signs of economic strength.

  • A report from the National Association for Business Economics indicates that three-quarters of its panelists now perceive the recession risk as being below 50%. This reflects a significant shift in expert opinion regarding the economic future.

  • Despite the optimistic outlook, there are still concerns about inflation and its impact on interest rate policies. The latest inflation numbers suggest that interest rate cuts might not occur until after the first quarter of 2024.

Real Estate Trends

Single-Tenant Net Lease Cap Rates Continue to Rise link

  • Cap rates for single-tenant net lease properties increased in Q4 2023, with office properties seeing the most significant rise. Retail cap rates grew to 6.35%, industrial to 7.00%, and office to 7.55%.

  • The increase in cap rates is attributed to higher borrowing costs and a decrease in 1031 buyers, leading to more property supply. The total number of properties rose by 11.6%, with the retail sector experiencing a 12.7% increase.

  • The market shift reflects broader economic trends, impacting investors and tenants differently across sectors. These changes suggest evolving dynamics in the real estate market, particularly in the office, industrial, and retail sectors.

Top States for Inbound and Outbound Migration in 2023 link

  • The 2023 United Van Lines' 47th Annual National Movers Study reveals a significant trend of Americans moving eastbound and southbound. They are choosing less expensive areas with amenities comparable to larger metropolitan areas.

  • Top inbound states for 2023 include Vermont, Washington, D.C., South Carolina, Arkansas, and Rhode Island. This shift indicates a preference for affordable, lower-density areas, driven by factors like housing prices, climate, urban planning, and job growth.

  • Conversely, the top outbound states in 2023 were New Jersey, Illinois, North Dakota, New York, and Michigan. This migration pattern highlights a significant change in residential preferences, possibly influenced by economic factors and lifestyle choices.

Signs point to more inventory this spring link

  • The U.S. real estate market is showing signs of increased inventory, with new listings finally surpassing last year's levels. This trend is a positive shift from the extremely restricted market conditions experienced last year.

  • Inventory has increased slightly, with over 505,000 single-family homes on the market, marking a 1.2% increase over the previous week and nearly 7% more than the same time last year. This increase is a significant change from the tight inventory levels of the past year.

  • Home prices are showing stability and slight strength, with the median price of single-family homes just under $420,000, a 3% increase from last year. The balanced supply and demand in the market suggest that while home prices are not skyrocketing, they are also not dropping, indicating a stable real estate market.

New Apartment Supply Set to Hit Another Record in 2024 link

  • The U.S. apartment market is set to break records again in 2024, with an estimated 670,000 new units, surpassing the 2023 record by about 50%. In 2023, nearly 440,000 units were completed, marking a 36-year high.

  • The South region of the U.S. is leading this surge, with approximately 53% of the 2024 completions. Texas cities like Dallas, Austin, and Houston are among the top contributors. The West region, including Phoenix and Denver, will also see significant increases.

  • Despite the record supply, the leasing environment has changed, with more regulated occupancy and rent growth levels. Big markets like New York and Newark in the Northeast are expected to double their 2023 delivery pace in 2024.

And South Region Contributes Most of Nation’s Record Apartment Supply link

  • In 2023, the U.S. saw the completion of nearly 440,000 apartment units, with the South region contributing over 245,000. This trend is set to continue in 2024, with the South forecasted to deliver around 359,000 units, accounting for 53% of the national total.

  • The West, Midwest, and Northeast regions are significantly behind in apartment construction. In 2023, the West added less than 95,000 units, while the Midwest and Northeast completed about 61,000 and 38,000 units, respectively.

Something I found Interesting

Empty Nesters Own Twice As Many Large Homes As Millennials With Kids link

  • Baby boomers, now empty nesters, own 28% of the nation's large homes, double the percentage owned by millennials with kids. This disparity reflects the better affordability conditions boomers experienced in their youth and the lack of financial incentives to sell now.

  • Over the past decade, the ownership landscape of large homes has shifted significantly. Ten years ago, young families were as likely as empty nesters to own large homes, but now, millennials with kids own less than 18% of large homes in any U.S. region.

  • The current housing market poses challenges for millennials and Gen Zers aspiring to own large homes. Factors like the recent lack of homebuilding, high mortgage rates, and the mortgage-rate lock-in effect have made large homes scarce and less affordable, especially for younger generations without equity from prior homes

Location Specific

Top 10 Most In-Demand Cities for Renters in the Northeast link

  • Queens, NY, tops the list as the most in-demand city for renters in the Northeast, offering diverse dining, a vibrant cultural scene, and more affordable living compared to Manhattan and Brooklyn. Renters are attracted to its unique communities, easy transportation, and family-friendly areas.

  • Buffalo, NY, and The Bronx, NY, follow, with Buffalo being celebrated for its friendly atmosphere, arts, affordable living, and proximity to Niagara Falls. The Bronx attracts renters with lower average rents than Manhattan, diverse communities, and significant green spaces like the New York Botanical Garden.

  • Here is the full list in order: Queens, NY, Buffalo, NY, The Bronx, NY, Philadelphia, PA, Boston, MA, Manhattan, NY, Jersey City, NJ, Newark, NJ, Worcester, MA, Providence, RI

That's all, folks. If you enjoyed today's issue, please reply (it helps with deliverability)

Cheers,

Vidit

If you are finding value, please consider helping the newsletter by becoming a paying subscriber

A subscription gets you:

✓ Content delivered 5-6 days a week

✓ Exclusive insights that are usually tucked behind paywalls (which I cover the costs for)

✓ Curated Top 10 lists

✓ The latest updates on prop-tech funding rounds

Subscribe for free to keep reading

This content is free, but you must be subscribed to Zero Flux to continue reading.

Already a subscriber?Sign In.Not now

Join the conversation

or to participate.