The COVID-19 pandemic turned previously sleepy cities into boomtowns. Extended or permanent work-from-home policies gave people more flexibility in choosing where to live, and people in very expensive markets like San Francisco and Manhattan took advantage by moving to areas where they could get more space for less money.
This created incredibly competitive housing markets in smaller cities, driving sales and prices sky high. But nearly five years into the pandemic, these hotspots are seeing significantly less net inward migration – and therefore less upward pressure on home valuations.
Altos Research State-by-state inventory data reflects this trend. High mortgage rates have pushed homeowners with rates between 3% and 4% to stay put, suppressing inventory and home sales across the country.
Comparing current housing inventory levels to 2019, supply has fallen in almost every state. In some states, especially in the Northeast, the decline has been quite dramatic. Connecticut (-73.4%), New Jersey (-64.1%), Maryland (-56.1%) and Massachusetts (-54%) are experiencing low inventories.
But that is not the case everywhere. Oklahoma (+33.6), Texas (+24.8%), Florida (+15.1%), Colorado (+11.8%), Idaho (+16%) and Arizona (+11.3%) all have higher inventory levels compared to 2019.
This is curious because Austin, Miami, Denver, Boise and Phoenix were among the markets that exploded in 2021 as people from California and New York moved in hoping to escape strict lockdown restrictions for more open pastures.
Although migration from California and New York to these areas continues, this is significantly less compared to 2021 and 2022. Migration data from the U.S. Census Bureau shows that in 2021 and 2022, more than 90,000 people moved from New York to Florida, but in 2023 this number dropped to about 71,00.
It’s a similar pattern for migration from California to other Western states. The number of Californians migrating to Arizona (-26.8%), Colorado (-21.3%), Idaho (-35.5%), and Utah (-15.1%) dropped dramatically between 2022 and 2023.
Although the numbers already started to cool in 2022, it’s a big turnaround from 2021, when Idaho saw a 53.4% jump in migration from California, while Florida saw a 59.6% increase in the number of incoming New Yorkers compared to 2019.
