The Housing Chronicles Blog: Housing bust decreasing mobility in Sunbelt states

Saturday, March 22, 2008

Housing bust decreasing mobility in Sunbelt states

One of the more significant impacts of the distressed housing market is the lack of mobility for a country accustomed to moving every 7 years. The Census Bureau has recently released a report for the annual period ending July 1, 2007 that shows the impact of decreasing mobility, including net population losses in Los Angeles County as well as parts of Michigan, Ohio and Florida. From an article in the Wall Street Journal:

Population increases in many fast-growing counties, particularly in the South and West, started slowing last year, suggesting that the housing crunch may be forcing many Americans to stay put.

People "are paralyzed in their quest for jobs in growing areas in many parts of the country because the housing market has shut down across the board," said William Frey, a demographer at the Brookings Institution, a Washington think tank.

The Census Bureau's annual estimate of county-population changes covers the 12 months that ended July 1, 2007. It shows that many Americans continued moving to sunny counties in Florida, Georgia and Arizona, but that the rates were slowing.

The data show a marked deceleration in population growth in several suburban counties that are farthest from urban centers -- the kind of counties to which some city residents had flocked in prior years for bigger houses and a different lifestyle. At the same time, urban areas and close-in suburbs were seeing population decreases slow, and in some cases reverse...

The slowdown of county-to-county movement pulled down expansion in other fast-growing counties. Population in California's Riverside County, which is east of Los Angeles, increased by 66,000 -- down from 80,000 between July 2005 and July 2006. In Texas's Harris County, where Houston is, the population increased by 60,000, less than half the gain between July 2005 and July 2006.

Some formerly highflying counties actually saw population fall. Broward County, Fla., part of the Miami-Fort Lauderdale metropolitan area, added an average of 28,000 residents a year between 2000 and 2005. But the county lost 13,000 residents between July 2006 and July 2007. That was the county's first population decline recorded by the Census Bureau.

Some cities and suburbs that had been losing people to outer areas saw the exodus slow. Cook County, Ill., which includes Chicago, had lost an average of 16,000 a year between 2000 and 2006. Last year it gained about 4,800. In San Diego, the population rose by 27,000 in the latest period, compared with an average gain of 5,000 a year between 2003 and 2006...

Movement from one part of the country to another often slows during economic weakness and sometimes spurs shifts. In the early 1980s, many people fled the industrial Midwest for Texas oil towns, then moved again when the boom ended. Earlier this decade, workers from tech firms in Northern California headed south after the late 1990s tech boom collapsed.

The housing market's woes, though, are working the other way. Demographers and headhunters suggest people may be staying put because they can't sell their homes or can't get financing for new ones...

Dru George, a partner at Austin McGregor, an executive search firm based in Dallas, said that in the past nine months he has had several executives turn down jobs in other places because of the financial hits they would take if they sold their homes. Some are "under water" -- that is, they paid more on their houses than they would get selling them -- he said.

"I'm doing a search in Austin, and I was speaking with candidates, East Coast, West Coast, in the South," he said. "A lot of these executives are $300,000 to $400,000 under water on their house. Do they sell it at a loss or stay put? That's something we see on a daily basis."

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