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New research suggests that housing costs and remote work are fueling a lasting shift in where people are choosing to live.
Expensive housing and remote work options are driving people from highly populated urban counties to smaller ones where the cost of living is lower, a new report from the Economic Innovation Group shows. These are not temporary shifts due to the pandemic, but permanent ones that are beginning to change the nation's "economic geography," the group says.
Smaller urban areas also declined in population during the past few years, while suburban populations were largely unchanged, and exurban, metro rural and nonmetro rural areas gained residents, the report said. It also noted that it’s not just the most expensive counties that are seeing people move away, but the “most expensive tenth of the country,” which includes 33 mostly large urban counties.
Home costs in all regions of the country continue to rise, according to the National Association of Relators. The median existing U.S. home price for all housing types in April was $391,200, up 15% from $340,700 in April 2021, NAR reported in late May. The trade group said that April marked 122 consecutive months of year-over-year increases, the longest streak on record.
Still unclear is how much surging mortgage rates and rising economic turbulence could cause the housing market to cool going forward.
The Economic Innovation Group research also shows that remote work options, not temporary pandemic policies, are a major factor for people leaving large cities. Remote workers who moved to lower-cost areas effectively have increased their real wages.
But while people are moving from densely populated cities to less populated areas, they aren’t necessarily moving to the least populated places across the U.S., the report said.
And some areas stand to gain a disproportionate share of remote workers. For instance, the report said vacation towns, which have an abundance of amenities but fewer skilled jobs, have seen significant growth, but only in nonurban areas.
Also, rural areas that have desirable amenities and a low cost of living, even if they are far from a metropolitan downtown, stand to benefit from fully remote and hybrid lifestyles, the research shows.
Counties facing the biggest population losses have many jobs that can be done remotely and high costs of living, the report said. Americans worked from home about 39% of the time as of April, after peaking at about 62% in mid-2020 at the height of pandemic-related closures, according to a national survey.
For more information from the Economic Innovation Group click here.
Jean Dimeo is managing editor of Route Fifty.