Real Estate Market Expected to Be Strong in 2020
According to a new report from the National Association of Realtors (NAR), the South and Midwest regions have accounted for an ever-increasing fraction of home sales since 2012. The share of home sales in the North and West have declined. The south posted the strongest numbers by far, comprising an impressive and disproportionate 43% - up from 36% in 2000.
The South’s increasing share of home sales is explained by the large domestic migration to the region. Between 2000 and 2018, net domestic migration to the South totaled 7.3 million people. The West, by comparison only added 1.2 million people during the same period. The Midwest actually lost 3.4 million people, but this downward trend reversed in 2011, and the Midwest has been gaining each year since. The Northeast lost almost 5 million people since 2000.
Another reason for net migration growth in the South and Northeast is affordability. By comparison the West coast and the Northeast have far higher home prices, on average.
Further, the NAR forecasts that Florida will continue to see increasing home sales for years to come. And CoreLogic reports that, “Florida … registered an increase higher than the national average, with … home prices growing by 3.9% in 12 months.”
Florida also boasted largest domestic migration in the country. And as domestic migration continues to grow, more jobs are created – this is not a vicious cycle; it’s a beautiful cycle. Since 2000, the state has created 2.1 million more net payroll jobs. Texas also did very well during this period creating 3.7 million new jobs (Of course Texas is a much larger state by population.)
Other states that did well include North Carolina and Arizona – each created 1.1 million new jobs in this time frame. According to the NAR analysis, the other states that experienced solid rates of net migration since 2000 are Colorado, Georgia South Carolina Tennessee, Washington, and Nevada. The regions that lost population due to domestic migration experienced a fall in their share of national home sales. The Northeast has seen its share of existing home sales fall from 18% in 2000 to 12% in October 2019. The West saw its share fall during that period from 23% to 21%
The states that contributed to Florida’s population growth are New York, Virginia, Pennsylvania, Illinois, and California. As a matter of fact, the Los Angeles Times reported that population growth in California is the slowest since 1900: “The [reasons] are rooted in fewer births, coupled with increased deaths among an aging population. The Golden State, however, has also seen … more and more residents leaving the state.”
From October 2018 to October 2019, the South continued to have the biggest net migration increase of any region in the country, increasing its population by 263,000 people. During the same period, 41,000 people moved out of the West, and 238,000 moved out of the Northeast.