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Welcome back to Trust the Process podcast, where we break into all things real estate, new home construction, and everything in between.
Today, we're going to talk about a topic that I'm really excited about. I'm excited to talk about migration.
Who's moving where across the country? I feel like this is a topic that really affects the national housing market as a whole.
One that's interesting not only to see what's happening, why are people moving, some of the jobs that are created in areas that are really growing,
and how it will affect us specifically. I'm excited on this one.
This one, the U-Call releases every year at the end of the year, kind of a recap. I subscribe to that.
I've already looked at the numbers. I know what happened in 2024 as relative to what happened in the years prior.
So, curious about your take on it, and what we can learn from that.
So, bring us all of your insights. Our resident expert, Michael, is going to dive us into this topic.
Wow. I don't have any history references in this. Although we could talk about other diasporas of people have moved.
Okay, we're not going to get into that. Trust the history.
Yeah, that's not what this is about. Homebuilding, homebuilding, homebuilding.
So, I'm fascinated with migration. I think it's so interesting to see how the country grows and moves,
and where humans kind of look for better opportunity, or look for a better life for so many factors.
And then, uh-oh, here we go. Looking through history again.
Yeah.
So, we're going to look at the South as a farming culture, the North as a factory culture, and how we kind of hit at the turn of the century,
meaning going into the 1900s, turn of the 20th century, where more people were living in cities than were living in rural lifestyles,
and on the farm, and less self-sufficient, and more industrialized.
And the U.S. kind of had that industrial revolution, arguably a little bit later, starting in the U.K.
Got to history, started in the U.K. in the 1800s, and got around it.
But I love that we found, we had that industrial base in the Northeast, and we had this great manufacturing hub in New York City,
it was a huge manufacturing hub, and we had raw goods being produced in the South,
and then being rendered into goods for export in the Northeast,
and for a long time, those were the migration patterns from farms into the North, into the Northeast, for those manufacturing jobs,
and for maybe a little bit more of a work-life balance, you weren't operating your farm,
you had kind of set working hours, and all those hours were long and unregulated.
It was still arguably, otherwise people wouldn't have done it, and it was a better life, and I'm fascinated with that move.
And then as we kind of deindustrialized, or some of the industry moved back to the South after World War II,
and we had all this developable land in the South where industry could move there,
and there are a lot of other political and social factors, there are no unions, so in large part,
so a lot of manufacturing made sense to set up down there,
and we had kind of a great lifestyle awakening to say, oh, it's warmer in the South,
we have this great new thing called air conditioning, we can live in Georgia comfortably,
we can live in North Carolina comfortably, we can live in South Virginia,
and kind of in that tidewater area comfortably now, and those areas grew in the middle of the century,
and we saw a lot of that happening and play out.
At the same time, the West was and continues to grow,
and kind of led by California and then kind of spread out through there,
and Seattle and all those other cities started to grow,
so the country grew and then people also moved around,
and what I love is that that's still happening, and we'll look back on this era,
and we moved around for other reasons, people, remote work, a lot of the knowledge workers and those higher income people
have relocated to areas with great quality of lives, Las Vegas is the chief among them, Phoenix,
and then with that, when you have that labor pool or talent pool, then you'll see advanced industries move there,
as well Phoenix is actually probably the poster child for that,
starting with Intel in the 60s and then now they have TSMC, they're making a lot of fabs there,
they're making fabs there, they're making microchips there and semiconductors,
and it's fascinating to see that happen kind of from late 2010s push by the city to say,
let's welcome this advanced industry, and they successfully recruited it, and I love it for them,
and they've grown tremendously, and then growth breeds growth,
so we're seeing that in our Sunbelt cities, and Las Vegas is a great example of that,
we have industry and tourism, and we have some tech here, and we have just other areas,
industries that support gaming and other cultural icons like UFC,
there's a lot of economic activity here that breeds more economic activity,
and all of this migration bears out in the numbers, and it's important,
I feel, to talk about why, before we talk about what are the numbers,
to talk about why are people moving around, and people move around for the American dream,
they move around for their own goals and ambitions, and I love to see it play out and see the hard numbers,
so a number that stood out to me, and we have a full year of data on this,
and we're in 2025, 2023 has solid numbers, because everything's kind of been equalized,
and these are published, 25.5 million people changed residences in 2023, they moved, their address changed,
and a lot of that is many in the same states, many in the same city, many down the road,
but 20% of those people moved to another state, and that is referenced in DMV data, U-Haul data,
it's hard, it's hard to track people, but you can kind of use those metrics to see trends and then compare them off of each other,
because not everyone uses U-Haul, not everyone uses a moving truck, not everyone changes their driver,
DMV is pretty accurate, but it doesn't factor in children or non-drivers, so there's a whole in every statistic,
so I like looking at it with a grain of salt, but overall I'm just looking at the trends,
and the numbers, even if they're 5% off, are massive, massive numbers, 25 million people,
that is 10 Nevada's moved residences, so the real estate agents in the audience probably love to hear that,
because that's a lot of real estate activity, and then the 20% moving to other states,
that affects home builders and kind of comes back to trust home builders,
and we're in a growing state like Nevada that has benefited from a lot of that migration,
so when you look at Nevada as a microcosm, and these trends kind of hold true to other Sunbelt states,
the numbers are going to be a little bit different, Nevada's numbers are always skewed because we're really Las Vegas and desert,
and Reno is a city in its own right, but Pell's in comparison, in terms of population size to the Las Vegas metro area,
so we're probably doing quick math, I would say we're 90% of the Nevada population, right?
But that is growing significantly down, there's a lot of industry that's moving to the northern Nevada,
so northern Nevada, right, from Sacramento and from the Bay Area,
but it's just like how Las Nevada's numbers are skewed by the fact that we're a small state,
there's only so many places to move in this state, versus a Texas, which has Dallas, Houston,
those huge metroplexes, Austin, San Antonio, they have just so much more capacity to take those additional people,
so our percentages are usually high, percentage is in terms of growth as a percentage of population,
but the raw numbers don't always bear out, so these numbers are going to be a lot different for your larger states.
Land, in one of our previous episodes we talked about land and how much of it is held, you take a state the size of Nevada,
versus a state the size of Texas, and look at that population, it's significantly different, we have so much open land here,
we're just not built out in the same way.
In the same way, and it's so much more fragmented in Texas, and there's a lot more room to grow,
and I would argue that maybe water's not as much of a concern, and Texas I'm sure it's a concern there,
they still have drought conditions many times, they hit those throughout the decades, versus Nevada, which is perpetually inundrown,
it feels like, but I feel that they also talk about zoning, we should have brought that up in our zoning episode,
Texas has some of the loosest zoning regulations, and building regulations in the country,
so for the most part, you do not see a lot of urban planning in those suburbs,
which is why you might drive down a Texas major highway and see a lot of residential but budding right up onto it,
there's just not that kind of land use and kind of overall visions for the cities, and that could be changing,
I might be talking out of my, you know what, but I feel that that's kind of been conventional wisdom,
that Texas has some of the loosest zoning laws, so with that, much more maybe arguably pro-growth than some of the other cities and states,
so that being said, they're going to have much larger numbers, so getting into those numbers though,
if you look at just, I love the way we look at data recently because we're looking 2020 onward,
which is a huge thing happened in 2020 if you were here for COVID, but also it cleanly started the decade,
so we started this decade with a lot of just reshuffling, right, and it was this big kind of calamitous event that prompted,
maybe in some ways, the way the wildfires are today in LA, it pushes people that were maybe 90% there,
and a big event like a COVID or a wildfire or something like that that affects your life in the day to day,
might prompt you to look for a better life, especially if you were kind of already there,
so when we look at the migration numbers using Nevada as a microcosm from 2020 to 2024,
we saw about 400,000 new residents in Nevada, so 400,000, 369,000 inbound new residents to our state.
In that same time period, 158,000 of those were from the state of California, so they represent almost half of the inbound migration to our state,
so it's definitely something to look at when you consider that we're a state of around 2.5 million people
and a city of around 2.2, depending on where you draw the boundaries, 2.2 million,
and in a four-year period, we had over a quarter million people, significantly over a quarter million people relocate here,
and our population didn't grow by that same amount because we did have some outward migration to people maybe try to hear and then move back
or get pulled away for other job opportunities, but we are a sticky state.
We do hold a lot of our people that do come here and growth breeds growth,
so that doesn't count as people that are born in those four-year periods,
and of course people die and we lose people that way too, but it is over time.
You say it's a sticky state. I would say five to eight to five years ago, it was very transient still.
It has become more sticky as time has gone.
I agree. I think we kind of hit a critical mass and I felt it personally as an Nevada resident.
I felt it around 2018. It just felt like, sounds stupid, but we got an Ikea.
Right, it grows to that capacity.
We've been a big, a big city. We've got multiple professional sports teams here now.
There's just a lot of legitimacy that our city has to say we have a football team with Las Vegas in front of it,
and I'm not a sports guy, a hockey team and a bunch of other ones.
Do you think that some of those things are lending itself to that people come and they want to stay versus previously?
Right. I feel like it was a lot more transient. People came, people left, and you know.
I think people were coming here for maybe a quick buck in the 90s and the early 2000s,
and then I also feel that the global financial crisis and the housing crisis that followed or caused it, however you want to look at it,
we were really the epicenter of that, and that was kind of a purging as well.
And a lot of the people that stayed or have moved since have only seen their home values go up and their economic opportunities expand,
and they start businesses here, they become home builders, and they stay for those reasons.
Right, and I think that we're at that point now, and maybe it's a golden era, maybe it's a golden age that kind of has a life cycle to it,
and we'll get so large that we'll start to push people out through maybe work our traffic or maybe our state will become less livable in that time period.
I don't know if that's going to be in our lifetimes, but maybe there's a life cycle of states where they kind of hit that number, that caring capacity,
but I feel like we hit our first threshold of our critical mass to where we can draw people in and keep them here,
and when there are people and businesses come and corporations relocated, industry and things that can keep the economy viable and resilient.
So I like seeing these numbers and I like knowing that we're not just 370 in, 350 out, that's a nice feeling to see that.
And we talked about another episode on trends household formation, which was huge.
It was on the order of around 26,000 households a year being created and are a net gain of 26,000 households per year, which is wild.
We are outperforming by pretty much every metric. We're outperforming other metro areas.
So nothing but growth in the future.
Now, the country's growing, so these people are coming and they're being replaced sometimes in the states that they're coming from,
but there are losers in this kind of episode of migration that we're in.
And I, depending on what you read, I feel that the biggest spike in migration of this decade might be behind us and we might start to see it kind of level out.
If you look at in 2021, about 8 million people moved states and now we're down to around 6, 5.5 million people moving around.
We talked about interest rates. Some of that might be they are not in love with Michigan, but they have a 3% interest rate on their home and they don't hate it that badly.
So there's things that are keeping people put. And yeah, it'll be interesting to see how many people move the 25.5 million in 23.
What does that look like in a more normal rate environment or if rates were to go down?
I feel that people kind of have those golden handcuffs on now that might keep them put.
So I think our biggest wave of migration for the decade is probably in the first half of it and then I think we'll see it kind of calm down.
And I think we'll pass some of that golden handcuff thing. I think like we talked about previously, people come to terms with.
They have. And there's a lot of things that I always say.
I think so, yeah. And we've had high rates for two years, almost three now.
So I mean, I would say above four, which is not high, but we've been not in the golden era of rates for at least about April 2022 is when you started seeing rates that started with a five handle.
So we're coming up on three years. So my point is, is that all those homes that transact during that time, those people don't have golden handcuffs on them.
Right. So there are people that just have a 6% rate and just say, well, I am moving for this job opportunity or this lifestyle change or I'm retiring and I'm not going to spend three more winters because my retirement home in Florida or in Las Vegas is going to have a 6% rate instead of a 4% rate.
I just don't feel that that state that doesn't that might put you off for three or four months or even a year, but two, three, four years or you're going to watch your 60s tick by and your kids might live in that state that you want to move to and your grandkids are now four because you didn't want to lose your 6% or your 3% rate for a 6%.
I mean, give me a break. So I think like we said that.
Yeah, how long are you really going to do that?
And that's the kind of reasons that cost people to consider moving. That's right.
That's right. And the financial situation and the current might be enough to quell it, but it's not going to put it off entirely. So I think that's probably where we're at, but I do feel that that great restructuring is probably still we might not see those numbers for the rest of the decade, the 2021 numbers, the 8.2 million.
That's an astounding amount of people. It really is.
When you think about trying to recreate those numbers, it's not likely. We talk about or think about who's losing.
Really, it's the, it's the states that lost a lot of their manufacturing hubs and lost a lot of their industry or an other, you know, otherwise kind of industry averse like New Jersey, Illinois, Michigan, the places that have the weather working against them have cost of living working against them have maybe certain political
climate working against them that just keep businesses from expanding businesses from moving there and people from relocating. So those are the states for the most part that are kind of the biggest losers when it comes to the migration.
And California, believe it or not, still ranks in the top five for attracting new residents.
But it is not growing. It is not growing in population.
Yeah, so it's actually a lot of people.
Wow. And we've felt that for years here.
We have. Yeah, we have. We feel like a suburb to LA many times. So I think that that is a trend that shows no sign of reversing. But it's a state that attracts a lot of people, maybe people that come here for the first time as a, you know, to start their journey in the U.S.
Maybe they start California and found their way out. Maybe that helps to prop up their numbers. But overall, they're, they're losing anything. You're a state that large and you're still losing population. You have all those people making babies.
Wow. Yeah.
Interesting. Yeah. And that's another, that is one of those things that's ever, ever fluid.
It is.
Yeah, we'll be able to watch that and see how the trends set over time. But interesting to look all the way back to 2023 because those are settled and set and we can see what has happened before. I feel like it's still, you know, the numbers are coming in and we have an angel.
Yeah, we have barely a month into the next year.
So, so yeah, all right. Well, thank you for joining us on this topic of migration and how it's affecting the housing movement across the country and in Vegas specifically. So we look forward to seeing you next time on Trust the Process. Thanks.
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