Why the Sun Belt Is Becoming an Economic Powerhouse

Selling the family home to downsize requires careful planning to know what your needs will be in the future. Feverpitched/iStock

Commentary 

Americans are on the move. Before the pandemic, many Americans had already relocated in search of career opportunities and better quality of life. However, once the reality of working from home set in, millions more decided to see what other states had to offer. This redistribution of population, in which warm-weather states—with the exception of California—have attracted hundreds of thousands of new residents, could become known as The Great Southern Migration.

The shifting demographics have created some unprecedented circumstances. For two years in a row, the population of California has decreased. In 2021, about 280,000 more people left California than relocated to the Golden State. Los Angeles and the Bay Area had especially large population losses. Meanwhile, in New York state and New Jersey, the pattern is similar. In New Jersey, for every seven people who left the state, only three moved in. New York state saw a loss of 300,000 residents between 2020 and 2021.

Several factors have fueled this redistribution. One of the biggest factors is cost of living, combined with work-from-home jobs. During the pandemic, people realized they could keep their jobs and work remotely in more affordable parts of the country.

A lot of that affordability was found in less crowded markets. Before the pandemic, buyers and renters were happy to pay more to live in or near urban centers, but recently there has been a shift toward less densely populated areas. According to United Van Lines Annual National Movers Study, 8 of the top 10 states to which people are moving are among the 25 least densely populated states in the country.

In addition to lower population density, a major lure is climate, according to the United Van Lines study. South Carolina, Florida, Alabama, and Tennessee were among the ten states that saw the largest influx of new residents relative to outbound residents. Other states in the South have also seen major population increases. The population of Texas jumped 1.42 percent this past year. Arizona’s population increased by 1.81 percent, and Florida, which we mentioned above, saw its population jump by 1.19 percent—an increase of over 260,000 new residents.

While there is a definite shift to less populated areas, urban areas in the Sun Belt have also seen their populations grow rapidly. Myrtle Beach, South Carolina was the fastest-growing metro area in the U.S. in 2021, with a year-over-year population increase of 4.24 percent. Meanwhile, out west, Phoenix, Arizona continued to attract displaced Californians and East Coasters. For the past three years, greater Phoenix has been growing in population by about 1.6 percent per year. Meanwhile, Dallas-Fort Worth grew by over 97,000 people between 2020 and 2021.

Whereas previous generations would make their money up north and then eventually retire to Florida or Arizona, millennials and members of Generation Z aren’t waiting until their golden years to enjoy the advantages of living in the Southern half of the U.S. Millennials have been relocating in much higher numbers than previous generations. According to a 2017 study by Zillow, 45 percent of people ages 23-35 reported having lived in their homes for less than two years. By contrast, in 1960, only 33 percent of young people reported having lived in their homes for less than two years.

In addition to the sunshine and mild (or nonexistent) winters, Southern states and metro areas have been able to attract new residents thanks to their robust job markets. For example, people were on the move from Connecticut, where unemployment this year stood at 4.6 percent, to Florida, where unemployment was at 3.2 percent. Simultaneously, people left California, with 4.9 percent unemployment, for Arizona, where unemployment at 3.3 percent unemployment.

Along with the influx of new residents, there has also been a migration of major employers to these markets. Greater Miami is quickly garnering the nickname of “Wall Street South,” with firms like Goldman Sachs, Tiger Global Management and D1 Capital Partners having all announced plans to move offices and executives to Florida.

Meanwhile, Austin, Texas has been luring tech giants. Apple is opening a new billion-dollar campus in the Texas capital this year, while Oracle, the world’s largest database company, moved its headquarters from Silicon Valley to Austin.

In addition to these recent shifts by major employers, many cities in the southern U.S. were already economic powerhouses, offering employment diversity. Houston, Texas is known as the energy capital of the world: it boasts nearly a third of the nation’s jobs in oil and gas extraction and the world’s fourth-largest concentration of engineers. While Atlanta, Georgia has long been home to CNN and Coca-Cola, the state’s film and television industry has taken off in recent years, with over $4 billion spent on production in 2021. Many of these states, particularly Florida and Arizona, also offer employment opportunities connected to tourism.

While the Great Southern Migration may seem like a recent anomaly, we may be witnessing the beginning of a major population shift. With the jump in population, the Sun Belt is poised to become a true economic powerhouse.