Not Business As Usual: Understanding America's Recent Internal Migration Trends And Drivers

In the wake of the pandemic, the United States has experienced a dramatic reshaping of its internal migration landscape. The years 2020 to 2022 marked a period of significant change in where Americans live, work and establish businesses. This shift, influenced by the rise of remote work, evolving economic conditions and a desire for a better quality of life, has led to notable population movements across the country.

Americans have a tendency to vote with their wallets. That also means the states where they opt to pay their taxes — and this is directly related to lifestyle choices. Yet policy researchers are quick to respond, asking key questions about the impact and potential responses at a government level.

The Great Urban Exodus and Suburban Surge

The first notable shift started in 2020 when many Americans opted to leave densely populated urban centers, seeking refuge in suburban and rural areas. This exodus was fueled by concerns over health and safety, as well as the newfound freedom afforded by remote work.

Real estate markets reacted swiftly to these trends. Suburban housing demand soared, with property values in these areas experiencing a significant uptick. Conversely, some major cities saw a temporary softening in their housing markets, as residents vacated apartments and homes in search of more space and a lower cost of living.

Sun Belt States Shine, But Numbers Can Be Deceptive

States in the Sun Belt, like Texas, Florida and Arizona, saw a considerable influx of new residents. Their appeal lay in the warmer climate, relatively lower cost of living and, in some cases, tax advantages. However, as lawyer Mark Pierce from Wyoming LLC Attorney and Company Sage notes, the increase in business registrations in these states doesn't necessarily correlate with physical population growth.

"States with favorable tax regimes attract a lot of business, particularly LLCs. But many of these are online or foreign entities using virtual offices," explains Pierce. "Therefore, a state could be seeing a population decline but still an increase in LLC formations. Census data provides a more reliable measure of internal migration."

For a deeper understanding of the most popular states for business formation, readers can explore this comprehensive resource.

Contrasting Local and Interstate Moving Trends

The moving industry has also witnessed these shifts firsthand. A spokesperson from Three Movers, a company specializing in local moving services, shares an interesting observation: "While we've seen a rise in local moves within states, interstate relocations have surged as well. People are not just moving to new neighborhoods; they're changing their state of residence entirely."

During this period, certain cities experienced the most significant population declines. New York City, San Francisco and Los Angeles, known for their high cost of living, witnessed notable decreases in their resident counts. On the other end of the spectrum, cities like Austin, Miami and Phoenix saw their populations spike, driven by their appeal to remote workers and retirees alike.

The Return to Urban Life

By 2022, there were signs of a reversal in these trends. With the pandemic's grip loosening and offices reopening, some former city dwellers began returning to urban areas, lured back by the reopening of cultural venues, restaurants and the resumption of in-person work and social activities.

Innovations in Work and Lifestyle Choices

As America navigated through the pandemic, the concept of what constitutes a "desirable" living and working environment underwent a significant transformation. The trend wasn't just about moving away from cities; it was a broader search for a better work-life balance. People were not only leaving high-density areas but also reconsidering what they valued in their living spaces and communities.

Innovative work models, primarily driven by the rise of remote and hybrid work formats, empowered many to rethink their living arrangements. Cities and states traditionally not seen as tech hubs began to attract a new demographic of remote workers. Places like Boise, Idaho and Raleigh, North Carolina, emerged as new beacons for those seeking a blend of affordable living, access to nature and a vibrant community life.

Furthermore, this period saw a surge in the "digital nomad" lifestyle, where individuals, freed from the constraints of a fixed office location, moved not just between states but also globally, seeking new experiences while staying connected to their work.

These trends have implications far beyond real estate and moving patterns. They are reshaping local economies, changing the dynamics of community development and even influencing political landscapes. As America steps into the post-pandemic era, these migration patterns signify a redefinition of the American Dream, with an increased emphasis on flexibility, well-being and a personalized definition of success.

The Elephant in the Room: New Retirees

Luigi Wewege, the president of Caye International Bank, keeps a close eye on the American economy. He argues, "It is true that the pandemic and migration were two of the biggest themes in recent years, yet new retirees fuelled by an aging demographic deserve much more attention as it can be far more impactful."

The rise in the number of new retirees in the United States is a significant factor that could substantially influence internal migration patterns over the next decade, especially considering the aging demographic. Here's an analysis of how this trend might shape internal migration:

Increased Movement to Retirement-Friendly States

Retirees often seek states with favorable climates, affordable living costs and tax advantages. States like Florida, Arizona and parts of the Carolinas are traditional retiree destinations due to their mild climates and relatively lower cost of living. We can expect these states to see continued or increased inward migration of retirees. As Dr. Ashok Bharucha explains, "These days, retirees do a lot more research on physical and mental wellness, in order to make better lifestyle choices".

Shift from Urban to Suburban and Rural Areas

As people retire, there's often a preference for quieter, less congested areas. This could lead to a significant shift from urban to suburban and rural settings. These areas offer a more relaxed lifestyle, which is appealing to retirees.

Impact on Real Estate Markets

The demand for housing in popular retirement destinations is likely to increase, potentially driving up real estate prices in these areas. This could also spur the development of retirement communities and facilities catering to the needs of older adults. Financial advisor Robert Cannon, co-founder of Experity Wealth and Experity CPA, says this trend is not just about the real estate market; it's about a broader demographic shift. He explains that "as the baby boomer generation retires, their preferences and financial power are reshaping the landscape of retirement living. This means not only more demand for traditional retirement destinations but also an increase in innovative living solutions that cater to the diverse needs and lifestyles of today's seniors."

Health Care and Senior Services

Areas with a growing retiree population will see increased demand for health care services and senior-specific amenities. This could lead to the expansion of health care facilities and services, including specialized medical care, assisted living and senior recreational activities.

Economic Shifts

The influx of retirees can impact the local economy of a region. Retirees often bring savings and pensions, contributing to the local economy without adding to the workforce. This could lead to a shift in the types of businesses and services that thrive in these areas.

Cultural and Community Changes

An increase in the retiree population can also change the cultural and community dynamics of a region. Areas with a high concentration of retirees might see an increase in age-specific programming, community events, and other activities tailored to their interests and needs.

Interstate Migration Patterns

As retirees move across state lines, some states may experience not only a population increase but also a shift in the demographic composition, potentially impacting policies and resource allocation.

Impact on Urban Areas

Cities might experience a demographic shift as the retiree population moves out. This could lead to changes in housing demands, urban planning and city services to cater to a younger or more diverse population.

Family Dynamics and Multi-Generational Migration

Some retirees choose to move closer to family members, including children and grandchildren. This could lead to multi-generational migration patterns, where families relocate together or to nearby areas.

Influence of Technology and Connectivity

With advancements in technology and the increasing importance of digital connectivity, retirees are more empowered than ever to live independently and maintain social connections. This might influence their choice of retirement location, opting for areas that offer both natural beauty and modern conveniences.

Conclusion

The internal migration trends of 2020 to 2022 represent a complex blend of societal and economic shifts. As America emerges from the shadow of the pandemic, the way people choose to live and work continues to evolve, reshaping the nation's demographic and economic landscape in profound and lasting ways.