The Great Real Estate Migration of 2020

An analysis of the departure of Americans from large urban cities to the suburbs.

History has recorded a great migration in the United States from roughly 1840 to 1870 when an estimated 400,000 people took to the Oregon Trail and its tributaries to leave one life behind and find a new life in the American West. It was one of the largest, if not the largest, mass migration of people in recorded history. There have been other migrations in our history, such as the move from New England to the Northwest territories in the late 18th century and from the rural south to northern industrial cities in the late 19th and early 20th centuries, as well as the immigration of citizens from many European countries to the United States in the late 1800s and early 1900s. Virtually all of these migrations included a group of people seeking new opportunities in new lands. They were moving to something new and what they thought would provide more opportunities for themselves and their families.

Another Great Migration

Now we have seen another “great migration” as hundreds of thousands of Americans depart large urban cities for the suburbs, the countryside and different parts of the country. While our data is only approximate, we can say this: According to the National Association of Realtors®, the existing-home-sales rate for 2019 was 5.34 million; the rate in February 2020 was 5.76 million, and the rate for September 2020 was 6.54 million. Taking an average of the first two months of 2020, the rate was 5.590 million existing-home sales. The average rate for July through September was 6.1 million existing-home sales. Taking the average of March through June, the data shows an average of 4.55 million. Should one assume that the 5.7-million rate for the March through June period would have held, then the last three recorded months of this year, July through October, produced more than 1.2 million more annualized housing sales than would have been expected. It may mean that 400,000 to 500,000 homeowners just moved to a new residence or bought a second home, away from an urban core area.

Now these are very imprecise calculations, as compared to one that more skilled statisticians would produce. Any way you look at it, we have just seen another of those great migrations that have characterized our nation’s past, except this is taking place in less than six months—and continues to this day. Remember, this only takes into account homeowners and home sales, not renting households. 

Reasons Behind the Migration

When we take into account reports of rising vacancies in a number of large urban areas and softening rents in those same markets, one can believe that what has taken place may be the fastest and largest migration in our history. From all that we’ve read, there are a myriad of reasons behind this migration:

  1. The impact of the pandemic is clearly at the top of the list.
  2. The shift from being required to live where you work to an economy and job market that allows you live outside of where you work, as employers redeploy workers away from offices and to their homes.
  3. The civil unrest in a number of cities in the spring and summer.
  4. Again, due to the pandemic, the closing of so many amenities that make great cities so attractive with no assurance of when or whether they may return.
  5. Lastly, the rising costs of living in major urban core areas when work can now be located in less expensive areas.

All have contributed to this sudden and large migration. What makes it different from those in the past is the drivers are not to new opportunities as much as moving away from what was. This is something new in our history. We are not talking about the millions who flee coastal hurricanes or mountain forest fires. Most of those residents return to their towns, neighborhoods and homes once the natural disaster has passed. 

Some, perhaps many, of those in this new migration may never return to where they once lived. Yes, some of the home purchases and rental of properties are short term or as a temporary second location. Again, there is little data to know how many of these modern-day migrants will return after COVID-19 or after the work-from-home movement has passed. From everything we read, however, and from talking to, for instance, the leaders of household goods transportation firms and others, many of these moves are permanent.

We can’t know all of the long-term implications of this migration. When might our leading cities recover their former vibrancy? Will telework become the new norm for millions of office workers? Will the potential decline in rents adjust to attract people back? There are many unknowns.

What we can say is that housing markets outside some of our major urban core areas have benefited enormously and cover virtually every region of the country. There is some expectation that this new migration will slow in the coming months. Some of this is due to the extreme inventory shortage in these markets. 2021 will be an interesting year.