The pandemic touched off a domestic migration that has continued to boost populations in many Sunbelt cities, according to a report by the Bank of America Institute.
BofA said its data as of the first quarter showed pandemic migration trends are not reversing. Instead, it “suggests that [Sunbelt] cities that saw a large influx of people during the pandemic have still been growing faster than other cities in recent quarters.”
The cities that saw the biggest population growth included Austin, Texas, and Tampa and Orlando, Fla., the data showed. Austin had the largest net inflow of population during the first two years of the pandemic at 5% and 1.5% over the past four quarters. Tampa saw a net inflow of 2.1% during the pandemic and was at Orlando 2%. Both had a net increase of 0.8% between the first quarter of 2022 and the first quarter of 2023.
In addition, Phoenix and Las Vegas also saw strong increases in population during the first two years of the pandemic, but the data showed that in recent quarters growth has slowed, up only 0.3% and 0.2% year-over-year, respectively, in the first quarter of 2023.
The cities where people fled most during the early years of the pandemic included San Jose, Calif., San Francisco and New York, and the rate of decline in 2023 continues to be the highest among major metropolitan statistical areas, BofA said. Boston and Los Angeles rounded out the top five.
In terms of who is moving where, the most popular destinations for baby boomers are Las Vegas, Phoenix, Tampa, and Orlando, according to BofA’. The younger generation, on the other hand, gravitates to Austin, which saw a 16% jump in millennial in the first quarter. Over the past three years, millennials have also increased by 6% in Cleveland, Tampa, and Dallas, the report said.
As noted by BofA, home and rental prices usually increase when there are large population inflows, but it cited recent data from Freddie Mac that shows that home prices are slowing rapidly in some cities with growing populations. Austin saw a steep drop in home prices over the past year due to a decline in migration in 2020-2021 and “the city also had a much higher number of building permits, which tracks the number of units approved for construction, than in other cities with an influx of residents,” BofA noted.
The report also pointed out that the decline of boomers in Austin over the past year could have added to the downward pressure on the city’s home prices over the last year. San Francisco also experienced a drop in home prices over the past year due to population decrease.
Rental prices, on the other hand, skyrocketed in cities with large inflows of residents. “In addition to the fact that population increases lead to higher demand for rental units, low affordability in the home purchasing market has likely also pushed some prospective buyers into the rental market, leading to even more upward pressure on rent levels,” the report said. BofA data showed that in April 2023, median rent payments in Austin, Orlando and Tampa were up 11%, 14% and 14% year-over-year, respectively. The national average is 8%, and 3% for San Francisco.
“Domestic migration continues to be a key theme shaping the housing market,” Anna Zhou, economist for Bank of America Institute, said in a statement. “While rising interest rates are dampening home-buying demand in the near term, the housing market in cities where millennials and baby boomers are moving could see strength in the longer term as the former enter prime home-buying age and the latter downsize their houses."
For the first time since 2014, boomers jumped ahead of millennials as the main homebuyers, according to the latest Home Buyers and Sellers Generational Trends report from the National Association of Realtors (NAR). The report, cited by BofA, found that from July 2021 to July 2022, 39% of surveyed homebuyers were boomers, followed by 28% for millennials and 24% for Gen X. The homebuying share for Gen Z and the Silent Generation each totaled 4%.
BofA credited the strength of boomer’s homebuying to the desire to move closer to family and friends, wanting smaller homes as their children move out, and having the greatest wealth across generations at $73 trillion in the fourth quarter in 2022, an amount that is eight times that of millennials, the report noted.
According to the generational trends report from NAR, BofA noted that only 49% of older boomers (ages 68 to 76) financed their home purchase in 2022, compared with 93% of those aged 33 to 42.
In addition to its internal data, Bank of America Global Research conducted a survey of 1,059 women and men between the ages of 25 and 41 in late April 2023. Additionally, a separate Bank of America 2023 Homebuyer Insights report, which included 1000 adults, was conducted by Sparks Research on behalf of Bank of America between March 29 and April 3.