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The Great Pandemic MigrationWhere are all these people coming from? That’s what long term residence of Nashville have been saying for many years, and those comments have only accelerated since the pandemic. But Nashville is not the place in the country that has been the recipient of new residents. According to the latest National Movers Study that came out on January 3rd, people are leaving dense highly populated areas on both coasts and moving toward more affordable and less populated parts of the country. In 2021, Vermont had the largest net percentage gain of residents, followed by South Dakota, South Carolina, West Virginia and Florida. All of these states, with the exception of Florida, generally have a lower cost of living. With more and more people working remotely, they are able to take their East or West Coast salaries and transport them to places where their salary will buy them more. Fewer people have to live the heart of these big cities – and that has begun what some are calling the Great Pandemic Migration. People are moving all over the country in greater numbers than we have seen in decades. On the losing side, according to the survey those states that lost the most by percentage were NJ, Illinois, NY, Connecticut and California. According to the Wall-Street Journal, The US Census Bureau also published its domestic migration estimates from the period of July 2020 to July 2021. It told essentially the same story using the number of people moving in or out of a state. It identified NY as the biggest loser of total residents, with Texas being the biggest gainer. Anecdotally, if you ask around town about where most of the newest residents are coming from here in West TN, you will typically hear California or Illinois (my next door neighbors actually moved in from California). The Journal notes that the states who are losing not only have population dense areas, but they are also high tax states. This is an interesting correlation and worth considering. So if there is a dramatic population shift occurring across the country, what are some of the implications for you and me?
Potentially Increased Political PolarizationThere are some who speculate that those leaving traditionally blue states for red states are not just fleeing high costs and dense populations, but they are leaving blue philosophies in order to find philosophies that match their own in red states. This is certainly debatable, but if this is the case, then like minded individuals are flocking together. The result may not be more diverse states politically, but actually more static and predictable ones. It’s too early to tell, but 2022 mid-term elections will give us some insight into the political implications of this great migration.
Cost of Living Likely to Increase in Rural AreasWith the potential for “city slickers” to go looking for wide open spaces, rural parts of the country may see more demand for housing and some measure of population growth. Each town will have to come to consensus over whether it will welcome this growth or fight it. Keep in mind that growth comes with its own share of blessings and challenges. Rural areas that have not had significant growth in decades may be faced with decisions they’ve never had before such as: do they build up infrastructure to support housing development; do farmers sell land for residential and commercial development; does the town borrow money to support the growth; does the town have a nimble school system that can adapt to a potentially growing population. There are no easy answers, and each town will have to have solid thought leadership that can tease out the advantages and disadvantages of growth to help their community have the right posture when it comes to growth. Regardless, if demand to move into these rural areas is present, it is likely to drive up land prices, which could increase the overall cost of living in those areas – not to mention the likelihood of tax increases to pay for additional schools and infrastructure.
Society Will Become More TransientThe old patterns of buying a house and living in it for decades is probably over. People will continue to be more mobile, and the following will likely be a more common pattern. You may start out in your first job out of college by living in a urban apartment for a few years, then move to a house in another part of town, only to buy a house in the suburbs to raise a family and few years later. Families will typically move at least once, maybe twice as they grow, or just as parents want a change of scenery or a different school district. When the nest becomes empty, parents will likely downsize, and perhaps eventually end up in a retirement community or lifestyle center. Mobility is the new norm – so expect your neighbors to changeover more than ever. For that matter, you may not stay in the house you are in currently as long as you think. At MBC/Foundation Bank, we know that change is one of the only real constants. When a life change causes a financial change, we are here to help. If you need to buy a new house – we have great rates on home loans with local decision making to get you an answer fast. Start your financial conversation with us today! If you’ve found this podcast helpful, we hope you will subscribe on your favorite podcasting app and share it on social media so that others can benefit from it. Until next time… God bless. – President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on January 18, 2022. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.