As money and affluence continue to invade the coasts, those not so fortunate will be making choices. Warning to all who are thinking about leaving California – it is virtually impossible to move back. But you can always visit!
As businesses look for cheaper places to expand, job growth in the middle of the country will begin attracting more residents, according to experts surveyed in the latest Zillow® Home Price Expectations (ZHPE) Survey.
That would reverse a trend over the last decade that drew many to the coasts following strong job markets, with more employment and income growth. Over half of experts surveyed said they don’t expect migration to the coasts to continue indefinitely. Of those, 56 percent pointed to jobs and 24 percent said high housing costs on the coasts will drive residents inland.
Recovery from the housing boom and bust has looked very different for Middle America and coastal America. While markets on the East and West coasts experience rapidly rising home values and strong job markets, markets in the Rust Belt and Midwest are moving more slowly; negative equity is still prevalent and job growth is minimal.
The quarterly ZHPE survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts about their expectations for the housing market.
The experts were also asked if they thought the distinct split between Middle America and the two coasts would reverse. Over half of the respondents said this trend has already begun to reverse, or expect it to in the future. A quarter of respondents believe this trend is a permanent shift, and 11 percent believe the migration to the coasts is an illusion.
Of the reasons experts predicted people would move back to the middle of the country, job growth was most popular. Just over 20 percent said people would migrate inland in search of more affordable housing, and 13 percent said Americans will start to seek the traditional lifestyle that the middle of the country has to offer. Only 2 percent said climate change will force residents away from the coasts.
“Since the Recession, employment has boomed in relatively expensive coastal areas, often attributed to a shift in preferences among workers – especially millennials – but also facilitated by soft labor markets that have resulted in a plentiful supply of available workers,” said Zillow Chief Economist Dr. Svenja Gudell. “Now, as labor markets tighten and the country approaches full employment, employers will have to look elsewhere to keep costs in check. For some businesses, this will mean relocating away from expensive coastal areas to more affordable interior communities. Sooner or later workers will follow the jobs, providing an impulse to local housing markets.”
Overall, the experts surveyed predict home price appreciation across the country will be up over 4 percent year-over-year by the end of 2016. They expect home prices to slow down over the next four years and by the end of 2020, they predict home prices will grow at an annual pace of just 2.9 percent.