These Housing Markets Will Win as the 'Great Migration' Continues By Brett Eversole The U.S. housing market just got even weirder... It used to be that the coastal cities were expensive and everything else was cheap. Now, the divide is all about east and west. That's according to Black Knight, one of the top data firms in the housing industry... Black Knight reports that the 12 major markets west of Texas (but including Austin) all fell in January versus the year prior. Meanwhile, the 37 markets east of Texas all increased. Nationally, home prices are down from their 2022 highs. But clearly, that doesn't tell the full story. "The housing market" isn't a single entity. It's made up of many housing markets... a combination of hundreds of cities. And prices don't always move in unison. Today, the new price gap is east versus west. But that's unlikely to last in the long term... A much larger and even more fundamental trend is going to decide the ultimate winners and losers in the housing market. It's called the "Great Migration." This shift has been underway for years. But it's far from over. And it remains the simplest way to see which U.S. markets will be the winners through the rest of this decade. Let me explain... | Recommended Links: | | Must See: New Bank-Crisis Briefing Another wave of volatility is about to hit U.S. stocks. One Wall Street legend shared where the stock market is going next... what it means for your money in 2023... and the ONE and ONLY trade he says you must make this year to protect and grow your wealth. Get the details, and a free recommendation, here. | |
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Yesterday, I explained why the "housing is dead" thesis is wrong. The simple reason is that when everyone thinks a market is dead, it's usually time to buy. National housing prices will almost certainly fall from here. But as Black Knight has shown, there will be winners and losers. If you want to know where the future winners will be, you must understand the Great Migration. This is a simple idea... Folks are moving away from large metropolitan areas in high-tax states, like New York and California. Instead, they're heading for the sunny, low-tax areas of the American Southeast – namely, Florida and Texas. If this sounds familiar, it should. This shift has been ongoing for years. It's so powerful because it just makes practical sense... New York, for example, is crowded and expensive. High-income earners pay a fortune in property and income taxes. And on top of everything, folks have to deal with brutal winters and exorbitant home prices. Where I live – near Jacksonville, Florida – it's the exact opposite... The winters are mild. The beaches are never too busy. Property taxes are low, and state income taxes are zero. And even as northerners keep flooding in, you can still buy a home relatively cheaply compared to a big city. These factors have fueled the Great Migration for the past decade. Hundreds of thousands of folks have moved from places like New York City, Los Angeles, and Chicago to enjoy the incentives Florida and Texas have to offer. You might assume this trend is dying as the housing market slows down. But recent data from Redfin shows that's far from the case... Just take a look at the table below. It shows the top 10 destinations for folks looking to relocate based on February searches of Redfin.com...
Now, to be clear, these aren't people who have actually moved. These numbers show the folks looking to move into these areas minus the ones looking to move out. But the data is clear... Five of the top 10 destinations are in Florida. Two are in Texas. Plus, Nevada is another zero-income-tax state, and Arizona's state income tax is darn low. Basically, Americans who are looking to move continue to follow the model of the Great Migration. And there's no reason to expect that to end anytime soon. What does that mean in a slowing housing market? It means that not every market will do well. With mortgage rates up, prices are sure to come down somewhat. But there will be winners and losers. The winners will be the places folks are moving to... And the losers will be the places folks are leaving. So don't give up on the housing market. The important thing is to think about it the right way... The Great Migration is still well underway. Places like Florida and Texas should continue to boom. So if you're betting on housing, make sure you're on the right side of this massive trend. Good investing, Brett Eversole Further Reading Home sales have slowed in the U.S. Most folks believe the housing market is dead... and that a 2008-style crash is looming. But those assumptions are missing a crucial change in the finances of everyday Americans... Get the full story here. "We have a secular trend that's hugely in favor of homebuilders," Brett writes. "We still need what these companies are selling... And we need a lot of it." Despite that, investors are still fleeing the sector – even as share prices turn around... Learn more here. |
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