One Fla. Country Is a Microcosm of Current Migration Trends

By now it’s well known. Work-from-home led to many people moving to locales where they could work remotely initially and later in hybrid solutions since heading into the office wasn’t required at the peak of COVID-19. And even now it isn’t mandatory all the time at many companies nationwide.

Employees have favored all sorts of locations, from their weekend and vacation homes to brand new sites in a different climate, places closer to family or because they offered greater affordability.

Smaller towns and suburbs, some in bucolic settings and far less congested and expensive, experienced a big influx, according to Placer.ai, which notes in a recent report that this accelerated domestic relocation trend began even before the pandemic. And it’s continuing now and may, in part if the WFH trend continues.

How Goes Hillsborough County, Fla., So Goes the Nation?

To understand the impact, the report studied data from Hillsborough County, Fla., where Tampa is located, and which is also the location where migration led to a big population explosion. 

In the three years between February 2020 and the same month this year, the population increased 2.8%, as many in that cohort sought more affordable housing. Not surprisingly, the top three counties where these migrating homeowners and renters left had higher home values and rents. And the cycle continued as some in Hillsborough County also left, seeking lower home values. 

Cost, of course, has propelled migration for eons. Indeed, housing represents the largest overall expense in the Consumer Price Index, often totaling one third of the index. 

But the current migration trend is having another effect: It is contributing to rising housing costs where the migrating homeowners and renters are going.

Take Hillsborough County again as an example. It saw housing prices soar 50.8%, according to Zillow data, more than the nationwide baseline of 39.5%. And rent prices also increased by 43.6% during the same three years focused on, compared to a smaller 26.5% nationwide. 

Class C Apartments

Diving into this one asset class further explains the trend, again analyzed in Tampa and Orlando, two fast growing markets.

Class C assets are usually at least 20 years old and located in less premier sites, as well as having sometimes deferred maintenance. As a result, they typically cost less to rent than Class A or B counterparts.

The analysis focused on zip codes with at least five Class C properties and found a correlation between rent increases in these buildings after those settling in had migrated from higher rent areas.

Bottom Line

This equivalent of a game of musical chairs or changing locations due to remote and hybrid work leads many to exit their expensive markets, head to more affordable ones but once there their increased population numbers drive up home prices and rents.

Yet, at the same time, those leaving big cities may slow price increases, which could result in new opportunities for some who otherwise might have been priced out of such locations. And that’s where it’s smart for residential developers and policy makers to keep their eyes focused on such changes to zero in to provide affordable housing where feasible due to the country’s continuing huge shortage. 

To give an idea of how big the void is, between 2019 and 2021, the shortage of affordable homes available to renters with extremely low incomes worsened by more than 500,000 units, increasing from a shortage of 6.8 million to 7.3 million, according to Housing Matters.