The last decade has seen many residents relocate to the East and West Coasts due to the strong job markets in those locations as well as employment and income growth. But a recent survey found that trend is likely about to change.
According to Zillow’s Quarterly Home Price Expectations Survey (ZHPE) released Wednesday, job growth in the middle of the country is expected to attract more residents as businesses look for cheaper locations to expand. More than half of the survey respondents (56 percent) said that job expansion in the middle of the country and nearly one quarter (24 percent) said that high housing costs on the coasts will prompt residents to relocate to Middle America.
The ZHPE is conducted quarterly by Pulsenomics and includes opinions of more than 100 housing experts on their expectations for the housing market.
As to the question of whether the trend of residents moving to the coast would reverse, more than half of the experts surveyed said it has already started to reverse or expect it to reverse in the future. A quarter of the experts said they believe the shift toward Middle America is permanent; slightly more than one-tenth (11 percent) said they believe the trend of residents moving to the coast is an illusion.
Job growth was the most popular reason among survey respondents believe residents will move away from the coasts and toward the middle; 20 percent cited more affordable housing was the reason, and 13 percent said they believe Americans will migrate to the middle in search of the lifestyle only that area of the country has to offer. Only 2 percent of the experts said they thought people would move away from the coasts because of climate.
“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.”
Survey respondents said they believe home price appreciation will be 4 percent by the end of this year and will slow down to an annual pace of 2.9 percent by 2020.
“Panel-wide, the experts currently expect U.S. home values to finish 2016 with a healthy 4.5 percent year-over-year gain,” Pulsenomics founder Terry Loebs said. “This projection implies a somewhat cooler, but still solid, second half of the year. Although further price moderation is expected next year, nearly 90 percent of the panel is projecting lower home value gains in 2017. The longer-run outlook for housing market performance remains steady. Overall, the expected five-year average annual growth rate for home values actually rose, albeit slightly, for the first time in three years.”