AMERICANS ARE MOVING FROM THE NORTHEAST and the Midwest to the South, according to a recent U.S. Census Bureau report. That's not news to home builders operating in those areas, but the data reveal trends that may represent future opportunities for builders, particularly when combined with additional population data.

“Domestic Net Migration in the United States: 2000 to 2004” tracked patterns of movement within the country and compared rates of in-migration and out-migration with 2000 census data, which reported patterns between 1990 and 2000. (The report deals with international immigration only if immigrants moved within the United States after originally coming to the country.)

Florida, Arizona, and Nevada were the top three destination states for Americans on the move between 2000 and 2004, with Florida averaging nearly 191,000 new residents each of those years. New York, California, and Illinois captured the bottom of the list, with New York losing an average of 182,886 people each year.

Four states—Maine, Rhode Island, Maryland, and Wyoming—switched from net out-migration to net in-migration during the four-year period. Rich Cromwell, president of the Modular HBA of Maine, says that he sees those new residents falling largely into two groups, both in search of higher quality of life: Baby boomers buying second homes and telecommuters moving from southern New England and New York.

In large part, the data reflect much of the housing industry's recent growth trends. Builders have followed home buyers to Phoenix and Las Vegas, and Florida building companies have been prime targets for acquisitions in recent years.

The report also shows how localized population trends can be. Although the state of California ranked among the greatest losers in domestic population shifts, one of its metro areas, Riverside/ San Bernardino/Ontario, Calif., took the top spot for in-migration among the country's largest 25 metropolitan statistical areas, adding an average of 81,460 residents moving from another locale each year.

That figure helps explain the area's growth as tracked by BUILDER's Local Leaders data (see “No-Fly Zones,” June 2006, page 120): In 2002, the top 10 builders there closed 9,822 homes; in 2005, they closed 18,055. That growth has benefited—and challenged—Los Angeles–based Pardee Homes, which was one of the first builders of master planned communities in Beaumont, Calif., in Riverside County. “We were the only game in town in Beaumont three years ago,” says Matt Sauls, marketing manager for Pardee's Inland Empire division. “Now, there are three other master plans there.”

Many observers believe that the Riverside/San Bernardino area has grown because it provides homes that are priced lower than in other areas of Southern California. The census data show that both San Diego and Los Angeles were areas of net out-migration between 2000 and 2004, though Los Angeles' rate declined significantly. (San Diego's remained the same.)

Keith Rosenthal, president of Phoenix Realty Group, an institutional investment firm that provides equity for urban workforce housing in Southern California and the New York area, says that the Census Bureau's report doesn't adequately reflect increased interest in city living. “Some of the housing in big cities is getting more expensive and causing people to seek less-expensive housing. But other infill areas are also affordable.” A good deal of urban work-force housing has been built since the end of the study's time-frame, he adds.

Michael Carliner, an NAHB economist, says that readers should be careful to consider other population trends along with the Census Bureau's domestic migration figures. Consider Utah, which switched from net in-migration to net out-migration: The state has a higher-than-average birth rate, which means that even when it loses residents, more households—and potential home buyers—are still created than in other states. In some states, international immigration is the Xfactor; in California, new residents from other countries helped make up for its loss of residents to other states.

HEATING UP COOLING OFF By and large, Americans are moving south and west. But some states have compensated for domestic population losses with higher rates of international immigration.


Learn more about markets featured in this article: Phoenix, AZ, San Diego, CA, Los Angeles, CA, Riverside, CA, Providence, RI.