Rising Costs Slow Migration to Southern States

The rising cost of living in some Sun Belt states that have been magnets for domestic migration in recent years may be weakening their appeal for residents of other states.

According to PWC and the Urban Land Institute’s latest report on emerging trends in real estate in 2025, the shift may be caused by “the declining cost-of-living advantage – especially in housing affordability” that Sun Belt metros once enjoyed.

“Cities like Orlando, Tampa, Austin and Phoenix, which previously saw strong inflows, are now experiencing only moderate in-migration… Some key Florida markets, including Orlando, Tampa and Southwest Florida are seeing outright population losses.”

Other factors at play in decisions about migration include quality of life, and a lack of infrastructure like adequate roads and transit to support the influx into the new city. Rising costs of both homeowner and commercial insurance in cities prone to climate disasters are another factor.

“Many experts believe climate change is now starting to affect location decisions,” the report stated. “Though limited now, the trend is likely to accelerate as climate impacts – and their costs to property owners – rise over time.” The report cited a Freddie Mac study revealing that in 2023, natural disaster concerns prompted one in seven households to investigate other places to live.

However, migration to other states is far from over. The report found that strong migration continues to Charlotte, Myrtle Beach, Raleigh-Durham and Nashville. But it is moderating in once-popular metros like Atlanta, Dallas, Fort Worth, Houston, Jacksonville and San Antonio.

Metros like Minneapolis, Riverside-San Bernardino and Sacramento that once were losing population are now enjoying the opposite trend, while the pace of out-migration in Philadelphia and Portland has slowed. In-migration has risen in Boise, Indianapolis and Las Vegas.

Remote work has had a big impact on location decisions. Among households that moved for this reason, 30% relocated to a different city, and 13% to a different state. The report also cites the growth of “surban” communities. “The term describes areas that blend suburban space with urban amenities,” giving residents the best of both worlds.

At the same time, many have chosen not to move away from their home turf. Apartment renewal rates have soared in 2023 and 2024 relative to historical averages, as the spike in home prices limits opportunities to buy. And fewer households are relocating to take new jobs, the report said. That could be attributable to the high cost of relocation. Fewer remote or hybrid work opportunities are on offer, but remain three times higher than before the pandemic, especially for well compensated tech or professional services jobs.

In some regions, arrivals from foreign countries have helped offset patterns of out-migration, especially on the West and East Coasts. Metros that benefited include Boston, Chicago, the East Bay area, Los Angeles, Miami, New York, Orange County, San Diego, San Francisco, San Jose, Seattle, and Washington, DC.

According to the report, international immigration is now the primary driver of U.S. population growth. It accounted for 75% of the increase in the 2020s, compared to 45% in the 2010s. One third of new international immigrants settle in Florida, California or Texas, and 10 states accounted for two-thirds of international migration over the past three years, including New York, Massachusetts, New Jersey, Illinois, Washington, Virginia and Georgia.

Foreign immigration is also the main source of an adequate labor supply, due to the low U.S. birth rate, the report stated. “With continued immigration, the U.S. working age population is projected to expand by more than 10 million in the next decade, fueling demand for all types of real estate and helping relieve costs,” the report commented.