Real estate investors need to pay attention to where people are living, and perhaps even more importantly, where they are moving. One way to stay on top of migration trends is to track the activity of moving trucks.
U-Haul released its data on the Top 50 U.S. Destinations where more of it’s moving trucks were headed this past year, and not surprisingly, three Texas cities ranked in the Top 5.
Houston maintained the lead for the 7th year in a row. Chicago, Orlando, Austin and San Antonio followed. Jacksonville, Indianapolis, Tampa and Dallas also made the top 20 list.
U-Haul says Memorial Day weekend marks the unofficial start of the moving season and lasts for most of the summer. Approximately 45% of moving trucks are rented during the summer as families take advantage of school being out of session. Warmer weather may also be a factor.
In this study, U-Haul tracks the top drop-off locations for one-way travel and does not account for outgoing traffic from those cities. Every city, regardless of size, is considered and data is not stated as a percentage of population and is not necessarily reflective of growth.
The U-Haul migration trends report was compiled from more than 1.7 million one-way U-Haul truck transactions that occurred during 2015.
U-Haul President John Taylor said in a press release that “Our migration data offers a comprehensive assessment of where people are traveling, because our growing network of 20,000-plus locations across the U.S. and Canada is unmatched in the do-it-yourself moving industry.”
These migration patterns vary dramatically from United Van Lines’ 39th Annual National Movers Study, released at the beginning of the year. United Van Lines represents the “do-it-for-you” model and may reflect higher income families.
In that report, Oregon held onto the No. 1 spot as the “Top Moving Destination” for the 3rd year in a row. Florida and Texas were also on that list, of course.
United Van Lines found the top reasons for moving included company transfers, new jobs, retirement and proximity to family.
According to United Van Lines, people are moving out of New Jersey and New York. This is the fourth year in a row that these two states have made the list of top outbound states. Two other states in the region — Connecticut and Massachusetts — also joined the top outbound list this year. The exception to this trend was Vermont, with 62% inbound.
The data reflects longer-term trends of younger people moving to the Pacific West, where cities such as Portland and Seattle are seeing a boom in technology and the creative marketing industry.
It also appears that the aging Boomer population is driving relocation from the Northeast and Midwest to the West and South, as they seek to retire to warmer areas that are affordable and have low or no state income tax, like Texas and Florida.
Nela Richardson, chief economist for the real estate broker Redfin, told CNN, “It takes two things to draw people inland in big numbers: jobs and housing affordability.”
No place seems to reflect that combination of jobs and housing affordability more than Texas.
In fact, Forbes magazine ranked Dallas as one of the best cities for jobs in 2016. Forbes also said that Texas has been “by far the most high-growth [job] hubs of any state for more than a decade.”
WalletHub named Plano, Texas (a Dallas suburb) as the best city in the country for job searching in 2016. Over the past 5 years, the number of jobs in Dallas increased by over 18% percent.
Companies like Liberty Mutual, Charles Schwab, and most recently Jamba Juice are just a few of the major corporations making the move to DFW., joining business giants Texas Instruments, Dr. Pepper, Snapple Group, Exxon Mobil, and AT&T.
As I said in episode #74 of Real Estate News for Investors podcast, lack of affordability in California, combined with high taxes and bad traffic, is driving more and more corporations to the South.
Jamba Juice opened shop in San Luis Obispo more than 25 years ago. Now the owner of the smoothie company announced plans to move its headquarters from California to Texas this year.
Facebook is building a $1 billion data center alongside AllianceTexas in Fort Worth, and is expanding its land holdings by nearly 40 acres.
Hely & Weber, a California-based orthopedic goods manufacturer and distributor, is moving its Ohio-based distribution hub to DFW, which will allow the company to significantly expand operations and possibly relocate its West Coast headquarters.
Jacobs Engineering Group, one of the world’s largest engineering companies, is preparing to move employees from its Pasadena headquarters to Dallas.
C&S Propeller has had a long history in California. In a recent press release the company’s president said, “We look forward to the aerospace resources the Fort Worth market offers along with a lower cost of living for our employees and greater flexibility in our day to day operations.”
Toyota Industries Commercial Finance Inc. selected Dallas for its new headquarters after looking at potential locations in other U.S. cities. That company has had most of its employees in Torrance, California until now. Average salaries will be about $80,000.
There’s been concern that Dallas home prices have risen too quickly over the past few years and that it’s not sustainable. It’s true that double digit home price gains won’t last and appreciation will slow down in the future. However, there does not appear to be a bubble in most of Texas quite yet.
I’ve often said that average home prices should not be more than 3-4 times salaries. The average home price in Plano, Texas, where this new Toyota headquarters will be located is $295,000. Employees making $80,000/yr can afford those prices easily.
Compare that to Walnut Creek, California where the average salary income is close to that of Plano, Texas at $83,000. The average home price there is $764,000 – nearly 9 times salaries!