Certain regions and metropolitan areas have been gaining population and our new research reveals where populations are growing and why.
Three key factors drive overall change in a population: number of births, number of deaths, and net migration. Declining in birth rates in the U.S. and an aging Baby Boomer population imply that, without international migration, the population would become stagnant over time. However, the country still enjoys substantial international migration of about 1 million people per year. This immigrant population tends to be younger, which, in turn, has the effect of increasing the birth rate.
According to recent Freddie Mac research, the fastest growing U.S. cities are in the southern and western states. Downtown Phoenix (AZ), Houston (TX), San Antonio (TX), Los Angeles (CA), and Austin (TX) are among the top ten urban areas that have experienced the most population increases.
Within the South, Texas and Florida witnessed the greatest increases in population, and most of the growth in metro areas in these states has been taking place in the suburbs as compared to the cities.
Over the past few years, the nationwide trend has been to move toward the suburbs and away from the urban city centers. In fact, 60 percent of all metro areas are experiencing more growth in the suburbs than in cities. The Millennial cohort is contributing to this trend, as they reach life events such as marrying and having children and thus are seeking larger homes and amenities such as good schools.
In terms of the components of change in population, net migration has accounted for population growth in 9 of the top 10 metropolitan areas. Only Washington, DC metro area had a faster growth due to natural increase (more births than deaths).
While the data suggests that the average house price growth is higher in metro areas with higher population growth, other factors such as housing stock and incomes also affect house price appreciation.
The number and distribution of people by age, race, ethnicity, and geographic areas drive demand for various types of housing in the many diverse U.S. markets. Population growth increases the demand for housing supply, and if the current supply cannot meet the growing demand, then the result is home value appreciation. But in the long run, the deep forces of supply and demand, including demographic-driven demand, shape the housing market, the cost of housing, and ultimately, who lives where and in what type of housing.
Where is housing demand strongest? Read the full Insight to learn more.