Dallas and Houston among the Top Searched Markets
When it comes to determining the best place to develop, buy and/or own an apartment property (or a portfolio of apartment properties), it is important to examine the area’s economic and demographic variables such as job growth and net domestic migration and population trends, education, income levels and apartment market fundamentals.
As Apartment Guide points out, it's also important to understand relocation patterns and trends to make an informed decision about buying, building and owning multifamily properties. Apartment Guide is in the business of putting renters into their ideal apartment homes. As such, it makes sense that the company's research team is interested in where – and why – relocations are taking place. This data can complement the U.S. Census Bureau data on net domestic migration trends by better identifying in which markets the relocations are occurring.
In its recent research, Apartment Guide (Relocation Trends: Where's Your Next Move?) provided a comprehensive list of top-searched sister metros (where people most often move from and where they move to) as well as the top-searched MSAs.
The top searched markets in order were Los Angeles; Washington D.C.; Dallas; Houston; Atlanta; New York City; Miami; Chicago; Phoenix; and Philadelphia.
The top sister metros were ranked as follows:
- Washington DC to New York City
- Washington DC to Philadelphia
- New York City to Washington DC
- New York City to Los Angeles
- New York City to Miami
- Washington DC to Los Angeles
- Dallas to Houston
- New York City to Atlanta
- Washington DC to Boston
- San Jose to Los Angeles
Apartment Guide based its data on internal search data from May 2013 to determine the top sister metros, while U.S. Census Bureau data was used to identify common reasons for the moves.
And the reasons for relocation included:
1. Family-related reasons
- 6.3% move due to change in marital status
- 10.7% move to establish own household
- 12.3% move due to other family reasons
2. Job-related reasons
- 9.5% move due to new job or job transfer
- 1.8% move to look for work or lost their job
- 5.5% move to be closer to work/easier commute
- 2.1% move for another job-related reason
Some of this information matches what we've found in our own research. The relocations from Washington DC to other metro areas were interesting – some of that could be due to the growing lack of government jobs available, especially given sequestration. (Annual job growth has slowed from 48,300 jobs in May 2011 to 38,000 in May 2012 to 21,400 in May 2013.) In a previous blog (In the Washington DC Area Apartment Market, Location Still Matters as Market Softens), we also mentioned that the Washington DC region is experiencing a large increase in apartment construction with 11,509 and 13,077 units being delivered in 2013 and 2014, respectively. The impact of slowing job growth and increasing apartment supply has slowed the rate annual effective rent growth.
Meanwhile, deep in the heart of Texas, relocations from Dallas to Houston could be considered a no-brainer. Just about every business publication has portrayed Houston as a jobs creation city, as a burgeoning gateway city, as a can-do city for business development and so on.
Though the Dallas-Fort Worth area is doing fairly well when it comes to both occupancy and annual effective rent growth numbers, it doesn't compare to Houston's effective rent growth statistics as the following table demonstrates:
The other relocation trend of interest involved New York City to the Sun Belt states of Miami, Los Angeles and Atlanta. We've written before that Miami is a growing market – the region is starting to see growth in jobs and population (and slowly improving effective rent growth). Los Angeles, which was hard-hit by the financial meltdown, is also making a comeback and Atlanta has also remained somewhat steady in its fundamentals.