US population declines in West, census data shows

For the first time in a century, the share of Americans living in the West is declining, especially in Pacific Coast cities like Los Angeles, Portland, San Francisco and Seattle. The main driver? Housing costs: high housing prices and rents. People are flocking to more accessible places like the Sunbelt, reinforcing the southward migration trend.

In a research note, Bank of America analysts wrote: “After the pandemic, the share of the US population in the South increased – continuing a decades-old phenomenon. In fact, the declining share of the population in the West is the new one.” For the first time in a century, the share of Americans living in the West declined.

“The West has grown in share for most or virtually all of the last 100 years,” said David Tinsley, senior economist at the Bank of America Institute, who contributed to the report. “It slowed down a little bit before the pandemic started, that growth — but the West is the perimeter story of the pandemic in that its population started to shrink as a share of the US population, which it really had never done before, at least for 100 years.”

The population decline was concentrated in Los Angeles, San Francisco, Seattle, Portland and San Diego, so three cities in California. Not much has changed. More recently, in early August, another note from Bank of America found that San Francisco, Los Angeles, Seattle and Portland posted significant year-over-year declines. This is why Tinsely calls this “primarily a Pacific story. So when we talk about the West in census region terms, it’s really the Pacific West,” he said. So what is behind the exodus? Mostly housing issues. House prices and rents are excessive in western cities. People can’t afford it, so they look to the Sunbelt.

The allure of the South was already a thing before the pandemic, but with remote work possible and the desire for more space, the trend has taken off. Not to mention that suddenly there were career prospects outside of Silicon Valley for people in tech. People moved in droves to places like Tampa, Jacksonville, San Antonio and Austin. And they still mostly see significant flows, even if they have slowed or declined slightly.

“It’s an affordability issue,” said Eric Finnigan, vice president of demographics for John Burns Research and Consulting. “People spending more time in homes means they need more home and can’t afford it.”

So you’ll see million dollar homes in Los Angeles and yet they’re considerably smaller than say Austin. It’s hard to buy a starter home in California’s coastal cities without family money. As of spring 2022, there was only one western metro area that ranked among the 20 most popular markets according to Realtor.com standards. “Western markets were once a mainstay on the hottest markets list,” said Hannah Jones, senior economic research analyst at Realtor.com. Before that, from August 2017 to March 2021, there were as many as 16 western metros that appeared on the hottest markets list, she explained.

“The popularity of markets in the western region has declined over the past couple of years as buyers have flocked to more accessible locations,” Jones said.

Tinsley agreed. A substantial part of the migration patterns we see has to do with housing costs and costs in general, he said.

“First and foremost is housing affordability,” Tinsley noted. “We looked at the relative mortgage payment you have to pay in US cities and correlated that with population change. And this is also true for rent – ​​the places that are the most expensive are seeing the biggest declines.”

In San Francisco, the median home value is over a million dollars; in San Antonio, it’s about $262,000; and in Jacksonville it’s around $302,000, per Zillow. The difference is more than 200%.

For rents, the median in San Francisco is 55 percent higher than the national average, and in San Antonio it’s 20 percent lower than the national average, Zillow data shows. So it’s not just buyers fleeing, but renters as well. Last year, on average, more than 40 percent of those leaving the West and moving to the South had incomes above $125,000, and about 10 percent had incomes above $250,000, according to Bank of America. There were also lonely people fleeing the western cities. There aren’t enough homes in the West, but in the South, the region is steadily building homes to meet demand, and the Sunbelt is cooling. Austin and San Antonio have actually seen their home values ​​drop over the past year.

One important thing to note is that while California has its own insurance problems, Texas and Florida, due to weather and natural disasters, look much worse. So there are more costs associated with living in the two Sunbelt states that aren’t exactly home prices or mortgage rates. But while there is anecdotal evidence and discussion, there is nothing necessarily to confirm that insurance costs outweigh other cost benefits. That could change over time, Finnigan said, but right now, down payments are the real challenge for anyone looking to buy. Similarly, Tinsely said, “if you sell your house in San Francisco and move to Texas, you can buy a mansion.”

But is this forever? Has the West completely lost its charm and welcoming atmosphere? Nobody knows yet. There are so many factors at play. Tinsley noted that the artificial intelligence boom could bring people back to Silicon Valley; we know they helped the offices. But the West may never be cheap because of supply and the struggle to build.

“The jury’s out on that a little bit, I’d say,” Tinsley remarked.

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