- Domestic immigration in the United States has slowed significantly over the past 50 years.
- Local home prices have less of an impact on older homeowners in expensive states than in past decades.
- Although wages drive migration, housing-related factors largely offset this.
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Fewer Americans are moving within the country, and baby boomer homeowners living in more expensive states may explain why.
in new working paper, Williams College economics professors William Olney and Owen Thompson found that residents of states with high housing prices, such as California and New York, are less likely to move as a result of their high prices. It was judged. The researchers argued that older homeowners are primarily responsible for the decline in internal migration.
“The decline in domestic migration appears to be primarily due to migration decisions of older homeowners in expensive urban areas becoming less responsive to local housing prices,” the researchers wrote.
Over the past several decades, domestic immigration in the United States has declined significantly. census data This shows that domestic migration has been slowing down since the 1970s amid the hollowing out of industry and economic recession.
“This suggests that the decline in internal migration is due to changes in structural aspects of migration choices, which affect individuals and families from different backgrounds,” the authors write. ing.
Zooming out, the researchers noted that people tend to migrate from the Northeast, Midwest, and California to the Northwest, Southeast, and Southwest. The regions with the highest net immigration are California, Illinois, Massachusetts, New Jersey, and New York, where wages and housing prices are relatively high.
Net-positive states like Georgia, North Carolina, Tennessee, and Texas often have lower wages and housing prices. Still, inflow rates to Sunbelt states, although much higher than most other states, are declining the fastest in 23 years.
Researchers used administrative data from the IRS to determine the reasons for the decline in immigration. They analyzed the disparity in wages and home prices between regions around large cities, finding that higher wages tend to attract migrants from lower wage regions, while regions with lower home prices tend to attract migrants from more expensive regions. I discovered that there is a tendency to attract people.
More specifically, a 10% increase in original wages is correlated with a 3.5% decrease in immigration, as people are more likely to stay in areas where high-wage jobs are plentiful. If the wage in his CZ of destination increases by his 10%, the immigrant’s wage increases by his by 7.8%.
Regarding housing, a 10% increase in original home prices increases immigration by 1.4%. If housing prices in the destination increase by 10%, migration will decrease by 2.6%.
The researchers then developed a model that predicted national migration rates based on differences between cities in wages and home prices, and found that these two factors alone accounted for about one-third of migration flows. .
The researchers found that wages themselves may have encouraged migrants to move more frequently, given that migration decisions have become increasingly sensitive to destination wages. However, housing-related factors are increasingly outweighing wages, and moving decisions are becoming less influenced by home prices in one’s current location.
“In particular, migration has become much less responsive to housing prices in the source CZs, with many households that decades ago would have migrated in response to rising housing prices now reluctant to stay. ,” the authors write.
The researchers found that states with high home prices, such as California, New York, and New Jersey, experienced the largest declines in home price sensitivity. Meanwhile, renters, college graduates, and young adults are slightly more sensitive to original home prices.
“For example, migration is significantly less common among homeowners, older adults, parents, and employed people, but significantly more common among those with higher education,” the researchers wrote.
Older homeowners also experienced these declines most severely. The researchers believe this may be because homeownership becomes more common later in life, adding that older Americans are less likely to earn a college degree. These homeowners are less likely to move or retire even if home values increase in their current location compared to 30 years ago. According to some sources, many baby boomers are moving to Florida, Nevada, and Arizona. Smart asset analysis.
according to census data, from the mid-1940s to the 1960s, nearly 20 percent of Americans moved every year, most of them for short periods of time. Meanwhile, the national migration rate in 2022 was only 12.6%. census data. Many people are moving less, given that a strong job market has brought high-paying jobs in many sectors across the country. Still, larger movements, such as cross-border movements, are increasing.
a Redfin Analytics Census Bureau data from January found that in 2022, empty-nesting boomers owned 28% of U.S. homes with three or more bedrooms. This is nearly double the 14% share held by millennials with children. Many baby boomers are clinging to their homes and have little financial incentive to downsize.