June 8th, 2023 7:00am PDT
(PenniesToSave.com) – According to a recent study by the Bank of America Institute, the COVID-19 pandemic has had a lasting impact on domestic migration within the United States. The study reveals that cities which saw an influx of people during the pandemic continue to experience rapid population growth compared to other cities in recent months. Surprisingly, despite this increase in population, housing prices in these cities are actually beginning to decline. This valuable information is based on BofA’s internal data, which is nearly a year ahead of the Census Bureau’s population data and provides key insights into current trends.
Austin had the largest increase in population among major metropolitan areas, with a 5% growth rate from 2020 to 2021. Over the past four quarters, it also experienced a significant increase of 1.5%. Tampa and Orlando also saw notable growth, with a net increase of 0.8% between the first quarter of 2022 and the first quarter of 2023. However, it is important to note that population growth has slowed down significantly in Phoenix and Las Vegas, which had seen substantial increases during the initial years of the pandemic. In the first quarter of 2023, their year-over-year (YoY) growth rates were only at 0.3% and 0.2% respectively
In contrast, cities such as San Jose, San Francisco, and New York saw a significant exodus of residents in the early days of the pandemic. This trend of decline has persisted into 2023, with these cities experiencing the highest population decrease among major metropolitan statistical areas (MSAs).
It’s interesting to note that even cities with growing populations, like Austin, are experiencing a significant slowdown in the increase of home prices. This is supported by data from Freddie Mac.
In contrast, cities that are seeing an increase in population are also experiencing a rise in rental prices. In April 2023, customers of Bank of America in Austin, Orlando, and Tampa saw a significant increase of 11%, 14%, and 14% respectively in median rent payments compared to the previous year. This is above the national average of 8%. However, San Francisco only had a modest increase of 3%.
According to economist Anna Zhou from the Bank of America Institute, domestic migration plays a crucial role in shaping the housing market. She emphasizes that although increasing interest rates might temporarily decrease home-buying demand, cities that appeal to Millennials and Baby Boomers could experience long-term strength in the housing market. As Millennials enter their prime home-buying years and Baby Boomers downsize their homes, these trends could contribute to the resilience of housing markets in these cities.